1

1. An analyst estimates that a stock has the following return probabilities and returns depending on the state of the economy. Calculate the percentage expected rate of returns.

   Stae of Economy	Prob.	Return
   Good	0.2	19%
   Normal	0.3	13
   Poor	?	7

1 points

QUESTION 2

1. Use the following table of states of the economy and stock returns to calculate the percentage standard deviation for Bradley.

   		Security Returns if State Occurs
   	Prob of State of Economy	Roten	Bradley
   Bust	0.6	-10%	24.9%
   Boom	?	40	6.5

2 points

QUESTION 3

1. Use the following table of states of the economy and stock returns to calculate the expected return on a portfolio of 56 percent Roten and the rest in Bradley.

   		Security if State	Returns Occurs
   	Prob of State of Economy	Roten	Bradley
   Bust	0.5	-12%	25%
   Boom	?	47	14

1 points

QUESTION 4

1. Use the following table of states of the economy and stock returns to calculate the percentage standard deviation of a portfolio ofa portfolio of 12 percent Roten and the rest in Bradley.

   		Security if State	Returns Occurs
   	Prob of State of Economy	Roten	Bradley
   Bust	0.3	-17%	29%
   Boom	?	35	13

3 points

QUESTION 5

1. Use the following information to calculate the percentage expected return a portfolio that is 42.7 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

   	3 Dorrs, Inc.	Down Co.
   Expected return	16%	13%
   Standard deviation	44	8
   Correlation	2

1 points

QUESTION 6

1. Use the following information to calculate the percentage standard deviation of a portfolio that is 75.2 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

   	3 Dorrs, Inc.	Down Co.
   Expected return	21%	14%
   Standard deviation	58	41
   Correlation	0.53