Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. You have the following data on a portfolio. You have decided to invest 25% of your money in A and 75% in B.
3. You have the following data on a portfolio. You have decided to invest 25% of your money in A and 75% in B. Find the return on your portfolio. (Ch8) Economy Probability Bust Boom 0.60 0.40 a) 10.25% b) 16.00% Bust 18.75% d) 22.50% e) 24.75% Return on A 5% Return on B -10% 30% 65% E(R): .25 (0.05) + .75 (0.10) = = 0.0125 - 6.075 0.0625 x.60=- = Boom (Er) = .025 (0.30) + 0.45 (.65) 0.0075 + 6.4875 = 6.495 x 0.40= 0.2250 0.25 x 0.0275 + 0.75 x 0. 2250 -
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
