Your portfolio is invested 31 percent each in A and C and 38 percent in B. What
ID: 2660455 • Letter: Y
Question
Your portfolio is invested 31 percent each in A and C and 38 percent in B. What is the expected return of the portfolio? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
What is the variance of this portfolio? (Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).)
What is the standard deviation of this portfolio? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Consider the following information:Explanation / Answer
Market Return [R]
Probability
E[R]
E[R^2]
Boom
0.31*0.351 + 0.38*0.451 + 0.31*0.331
0.3828
0.16
0.061248
0.023446
Good
0.31*0.121 + 0.38*0.101 + 0.31*0.171
0.1289
0.44
0.056716
0.007311
Poor
0.31*0.011 + 0.38*0.021 + 0.31*-0.051
-0.00442
0.34
-0.0015
6.64E-06
Bust
0.31*-0.111 + 0.38*-0.251 + 0.31*-0.091
-0.158
0.06
-0.00948
0.001498
TOTAL
1
0.106981
0.032261
A
Expected Return = E[R] = 0.10698
B
Variance of Portfolio = E[R^2]
Market Return [R]
Probability
E[R]
E[R^2]
Boom
0.31*0.351 + 0.38*0.451 + 0.31*0.331
0.3828
0.16
0.061248
0.023446
Good
0.31*0.121 + 0.38*0.101 + 0.31*0.171
0.1289
0.44
0.056716
0.007311
Poor
0.31*0.011 + 0.38*0.021 + 0.31*-0.051
-0.00442
0.34
-0.0015
6.64E-06
Bust
0.31*-0.111 + 0.38*-0.251 + 0.31*-0.091
-0.158
0.06
-0.00948
0.001498
TOTAL
1
0.106981
0.032261
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