Question
1) Suppose you form a portfolio that consists of 60% investment ABC and 40% investment RST. (Must show work) Economy States Probability r abc r
1) Suppose you form a portfolio that consists of 60% investment ABC and 40% investment RST. (Must show work)
| Economy States | Probability | r abc | r rst |
| 1 | 0.1 | 22% | -2% |
| 2 | 0.6 | 12% | 12% |
| 3 | 0.3 | 2% | 30% |
a) compute the return of the porfolio in each state:
b) compute the expected return of the portfolio:
c) compute the standard deviation of the portfolio:
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Financial Management Theory And Practice
Authors: Prasanna Chandra
8th Edition
0071078401, 978-0071078405
