Finance Question

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State of Economy Probability of State Return if State Occurs Return if State Occurs Return if State Occurs Return if State Occurs State of Economy Probability of State Stock A Stock B Stock C Stock D Boom 40% -15% 16% 25% 20% Normal 30% 5% 10% -3% 2% Recession 30% 28% 6% -10% -5% 9. What is the expected return, standard deviation and variance of each stock? 10. If the investor invests $1000 if A, $2000 in B, $3000 in C and $4000 in D, what is the return of this portfolio in each state of the economy? A) What is the expected return, standard deviation and variance of the portfolio? B) Given the dollar investment given above, if Stock A, B, C and D have betas of 1.56, 1.32, 0.1 and 0.7, respectively, what is the beta of this portfolio? *** Most thorough answer gets the best rating*** Jan 21 2014 11:26 AM

 

Solution ID:609194 | This paper was updated on 26-Nov-2015

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