ANSWER ALL 3

1) there is a 13.40% probability of a below average economy and a 86.60% probability of an average economy. If there is a below average economy, stocks a and B will have returns of 2.64% and 0.39%, respectively. There is an average economy stocks A and B will have returns of 13.38% and 5.11%, respectively. Compute the following for stocks A and B.

a) stock A expected return

b) stock b expected return

c) stock A standard deviation

d) stock B standard deviation

2) There is a 15.98% probability of an average Konomi and 84.02% probability of a above average economy. You invest 40.79% of your money in stock S and 59.21% of your money in stock T. In an average economy the expected returns for stock S and stock T are 8.82% and 10.9%, respectively. In an above average economy the expected returns for stock S & T are 18.59% and 38.47%, respectively. What is the expected return for this two stock portfolio?

3) you are invested 29.44% in growth stocks with a beta of 1.504, 35.47% in value stocks with a beta of zero. 558, and 35. 09% in the market port folio. What is the beta of your portfolio?

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