Based on the information provided in the following table, answer the questions that follow State of economy Probability Return on asset A Return on asset B Boom 40 6 30 Bust 60 35 5 1 00 a) What is the expected return for each of the two assets (2 marks) b) What is the standard deviation of each asset (3 marks)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 30, 2024

Based on the information provided in the following table, answer the questions that follow. State of economy Probability Return on asset A Return on asset

Based on the information provided in the following table, answer the questions that follow.

State of economy	Probability	Return on asset A	Return on asset B
Boom	.40	-6%	30%
Bust	.60	35%	-5%
	1.00

a) What is the expected return for each of the two assets? (2 marks) b) What is the standard deviation of each asset? (3 marks)

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

Recommended Textbook for

Public Finance In Democratic Process Fiscal Institutions And Individual Choice

Authors: James M. Buchanan

1st Edition

0865972192, 978-0865972193

More Books

Students also viewed these Finance questions

Question

=+Is Jill better off or worse off than before the interest rate increase?

Answered: 1 week ago

Question

★★★★★

In 2010 the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the...

Answered: 1 week ago

Question

★★★★★

Determine the structure of the following unknown organic compounds from the 'H and 3C NMR below. When supplying spectroscopic information for parts b-c below, be sure to give units appropriately when...

Answered: 1 week ago

Question

★★★★★

Please answer the question, if it is math just solve the math correctly no need to pass the time for explanation please.Thank you.Consider the following PDAs. Match them with the suitable definition...

Answered: 1 week ago

Question

★★★★★

Five years ago, David borrowed $300,000 to purchase a house in Sandy Lake. At the time, the quoted rate on the mortgage was 8 percent, the amortization period was 25 years, the term was 5 years, and...

Answered: 1 week ago

Question

★★★★★

Great Nuggets finds that there is a clear gender difference in the demand for their chocolates. Men have very little price sensitivity and tend to buy whatever the sales clerk recommends. Women, on...

Answered: 1 week ago

Question

★★★★★

In problems 4 and 5, evaluate the integral using a table of integrals. Indicate which formula dx 1 4. .dx 5. x(x+16) you use.

Answered: 1 week ago

Question

★★★★★

Tyare Corporation had the following inventory balances at the beginning and end of May: May 1 May 30 Raw materials $ 29,000 $ 37,000 Finished Goods $ 78,500 $ 73,000 Work in Process $ 17,000 $ 17,039...

Answered: 1 week ago

Question

★★★★★

A decision maker is working on a problem that requires her to study the uncertainty surrounding the payoff of an investment. There are three possible levels of payoff, i.e., $1,000, $5,000, and...

Answered: 1 week ago

Previous Question Next Question