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3. Set (B) [10 Marks] Based on the scenario below, what is the expected return for a portfolio with the following return profile? Bear Normal
3. Set (B) [10 Marks]
Based on the scenario below, what is the expected return for a portfolio with the following return profile?
|
| Bear | Normal | Bull |
| Probability | 0.4 | 0.2 | 0.4 |
| Rate of return | -20% | 10% | 20% |
Answer the following questions based on below table:
|
| Bear | Normal | Bull |
| Probability | 0.4 | 0.2 | 0.4 |
| Stock X | -10% | 15% | 40% |
| Stock Y | -12% | 20% | 20% |
- What are the expected returns for stock X and Y? [ 3 Marks]
- What are the standard deviations of returns on stock X and Y? [ 3 Marks]
- Assume that of your Rs 1,00,000 portfolio, you invest Rs 80000 in Stock X and rest in Stock Y. What is the expected return on portfolio? [ 4 Marks]
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