Question
10a) Consider the following information: State i Probability of State i Actual Return of Ford Inc Boom 40 % 18 % Normal 37 % 6
10a)
Consider the following information:
| State i | Probability of State i | Actual Return of Ford Inc |
|---|---|---|
| Boom | 40 % | 18 % |
| Normal | 37 % | 6 % |
| Bust | 23 % | -5 % |
What is the expected Return of Ford Inc? (Answer as a percentage, and round to 2 decimal places.)
Answer:
10b)
You are going to make a portfolio consisting of 100 % of Bank of America Stock and 0 % of Caterpillar Stock. You also have the following information:
| State i | Probability of State i | BOA Return | Caterpillar Return |
|---|---|---|---|
| Boom | 90 % | 17 % | 20 % |
| Bust | 10 % | -1 % | -1 % |
What is the expected return for the portfolio? (Answer as a percentage and Round to 2 decimals)
Answer:
10c)
You are going to make a portfolio consisting of 100 % of Bank of America Stock and 0 % of Caterpillar Stock. You also have the following information:
| State i | Probability of State i | BOA Return | Caterpillar Return |
|---|---|---|---|
| Boom | 90 % | 17 % | 20 % |
| Bust | 10 % | -1 % | -1 % |
What is the standard deviation for the portfolio? (Answer as a percentage and Round to 2 decimals)
Answer:
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Finance And Occupational Pensions
Authors: Charles Sutcliffe
1st Edition
1349948624, 978-1349948628
