1. Compute the expected return and standard deviation. (Do not round intermediat

Question

1.

  

Compute the expected return and standard deviation. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

2. An investor owns $5,000 of Adobe Systems stock, $6,000 of Dow Chemical, and $6,000 of Office Depot. What are the portfolio weights of each stock? (Round your answers to 4 decimal places.)

3.

You have $30,000 to invest. You want to purchase shares of Xerox at $18.34, Qwest at $9.15, and Liz Claiborne at $45.73. How many shares of each company should you purchase so that your portfolio consists of 10 percent Xerox, 50 percent Qwest, and 40 percent Liz Claiborne? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Following are four economic states, their likelihoods, and the potential returns:

Explanation / Answer

Expected return = 10.28%

Standard dv = 33.28%

Company

p(x) return p*x p*(x - mean)^2 0.19 62.00% 0.1178 0.050824 0.59 12.00% 0.0708 0.000175 0.11 -22.00% -0.0242 0.011462 0.11 -56.00% -0.0616 0.048323

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