Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor holds a portfolio with the following weights: 20% in T-bills, 50% in the S&P500 equity index, 10% in Google and 10% in Amazon.

An investor holds a portfolio with the following weights: 20% in T-bills, 50% in the S&P500 equity index, 10% in Google and 10% in Amazon. The actual returns on these assets over the last 5 years are as follows:

Year T-bills S&P equity index Google Amazon
1 0.01 0.06 0.12 0.01
2 0.01 0.09 0.08 -0.20
3 0.02 0.01 -0.02 0.16
4 0.01 -0.02 0.06 0.14
5 0.01 0.03 0.20 -0.02

What is the arithmetic average return on each of the assets? What is the geometric average return on each of the assets? What is the sample variance for each of the assets? What is the sample standard deviation for each of the assets? What is the arithmetic average return across the 4 assets (ignoring the relative weights the investor has in each asset within her portfolio) for each of the 5 years? What is the return on the portfolio (i.e., the weighted average return across the 4 assets) for each of the 5 years?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Times Guide To Finance For Non Financial Managers

Authors: Jo Haigh

1st Edition

0273756206, 978-0273756200

More Books

Students also viewed these Finance questions

Question

CFG of language { 0 , 1 } that has odd 1 s

Answered: 1 week ago