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b) Answer parts i, li and ill based on the information below An investment portfolio consists of a share and a bond. The return on
b) Answer parts i, li and ill based on the information below An investment portfolio consists of a share and a bond. The return on each asset according to the state of economy is provided below: State of economy Boom Normal Recession Probability 30% 60% 10% Return on Share 10% 8% Return on Bond 2% 7% 5% -5% Calculate the expected return for the share and the bond. Round your answer to the nearest 0.01% (2 marks) Calculate the standard deviation for the share and the bond Round your answer to the nearest 0.01% (4 marks) BI. Calculate the expected return of the portfolio If you allocate 40% of investment into share and the remaining into bond. Round your answer to the nearest 0.01%. (2 marks)
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