Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can you please show how to so in excel? and that one number if yiu cant tell is 10.42% 2. Suppose you have the following

can you please show how to so in excel? and that one number if yiu cant tell is 10.42%
image text in transcribed
2. Suppose you have the following historical information: Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Bond A Return 23596 1.6796 3.33% 5.4196 6.10% 5.3496 4.1196 2.00% 1.019 .68% Stock Z Return -2.1196 8.4396 4.56% 11.449 9.4196 8.3296 6.3496 2 50% 1.0896 -2.36% Market Return 7.4296 6.1996 3.259 9.50% 11.32% 10.42% 8.4296 3.2196 -1.9996 -2.54% GDP Growth Rate 2394 1.3496 2.9696 4.50% 3.0194 2.1996 1.90% 90% 4496 .06% The covariance between Bond A and the market is 8.40% and the covariance between Stock Z and the market is 17.25%. Historically, GDP growth rates less than 1% represent recessionary years, while GDP growth rates over 2.5% represent booming years. There is an equal 30% chance of a boom and a recession next period, with the remaining being the possibility of a normal economy. Anything in the middle is a normal year. a. If you have 25% of your portfolio in Bond A and the rest in Stock Z, what is your expected return on your portfolio? (10 pts) b. If you have 25% of your portfolio in Bond A and the rest in Stock Z, what is your beta of your portfolio? (10 pts)

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_2

Step: 3

blur-text-image_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

Corporate Finance For Dummies

Authors: Michael Taillard

2nd Edition

1119850312, 978-1119850311

More Books

Students also viewed these Finance questions