Question
Can you solve with details and please add a note and formulas,thank you. You own three stocks and have estimated the following joint probability distribution
Can you solve with details and please add a note and formulas,thank you.
You own three stocks and have estimated the following joint probability distribution of returns:
| Market Condition | Probability of Occurence | Return on Stock A | Return on Stock B | Return on Stock C | Return on Stock D |
| Growth | 35% | 10 | 80 | 90 | 30 |
| Normal | 40% | 40 | 20 | 10 | 30 |
| Recession | 25% | 80 | -10 | -30 | 30 |
- Calculate the portfolios expected return and standard deviation if you invest 35% in Stock A, 35% in Stock B, 30% in Stock C. (20 points)
- Calculate the portfolios expected return and standard deviation if you invest 25% in Stock A, 25% in Stock B, 25% in Stock C, 25% in Stock D,. (20 points)
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Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
10th edition
978-1260013955, 78034639, 978-0078034633
