Consider the following information State of Economy Probability of State of Economy Rate of Return if the State Occurs Omega Ltd Delta Ltd Boom 0 7 8 2 Bust 0 3 4 15 (a) Calculate the expected return on a portfolio consisting of 65 percent investment in Omega and 35 percent in Delta (2 marks) (b) Calculate the standard deviation of the portfolio (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 Jul 16, 2024

Consider the following information: State of Economy Probability of State of Economy Rate of Return if the State Occurs Omega Ltd Delta Ltd Boom 0.7

Consider the following information:

State of Economy	Probability of State of Economy	Rate of Return if the State Occurs
State of Economy	Probability of State of Economy	Omega Ltd	Delta Ltd
Boom	0.7	8%	2%
Bust	0.3	4%	15%

(a) Calculate the expected return on a portfolio consisting of 65 percent investment in Omega and 35 percent in Delta. (2 marks)

(b) Calculate the standard deviation of the portfolio. (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

Finance A Quantitative Introduction Volume 1

Authors: Piotr Staszkiewicz, Lucia Staszkiewicz

1st Edition

0128015845, 978-0128015841

More Books

Students also viewed these Finance questions

Question

★★★★★

Use the formula for the joint density of Y1 and Yn shown in Exercise 8.52 and the transformation technique of Section 7.4 to find an expression for the joint density of Y1 and the sample range R = Yn...

Answered: 1 week ago

Question

★★★★★

These transactions took place for Guard Dog Co.: Instructions Record the transactions in the general journal. 2000 May 1 Dec. 31 Received a $7,000, 1-year, 12% note on account from T. Jones. Accrued...

Answered: 1 week ago

Question

★★★★★

3. The brain is relatively plastic, so enriched, active environments and flexible instructional strategies are likely to support cognitive development in young children and learning in adults. The...

Answered: 1 week ago

Question

★★★★★

CellPhone Corp. began 2012 with retained earnings of $290 million. Revenues during the year were $360 million, and expenses totaled $250 million. CellPhone declared dividends of $44 million. What was...

Answered: 1 week ago

Question

★★★★★

To fix problems with my operating system and / or application software, I should install: I. OS and / or Software Updates II . Anti - Virus III. Firewall IV . All of the above

Answered: 1 week ago

Question

★★★★★

1 . What is a data structure? Explain and give an example 2 . How do non - linear data structures solve the weakness of linear data structures? Explain and give an example 3 . What is the draw type...

Answered: 1 week ago

Question

★★★★★

Prepare the statement of cash flows for the current month. Note: Cash outflows should be indicated with a minus sign. Required information [The following information applies to the questions...

Answered: 1 week ago

Question

★★★★★

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago

Question

★★★★★

Burdeno Appliances has two divisions, Sales and Financing. Sales is responsible for selling Burdeno's Inventory and maintaining Inventory for future sale. Financing Division takes loan applications,...

Answered: 1 week ago

Question

★★★★★

Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 120,000 cases at a budgeted price of $60...

Answered: 1 week ago

Question

★★★★★

Please answer as per question otherwise it would be reported. Identify the elements that the Crown must prove for each of the offences that the accused was charged with on January 12, Y0. On January...

Answered: 1 week ago

Question

★★★★★

3. Mymanagementlab Only - comprehensive writing assignment for this chapter.pg 87

Answered: 1 week ago

Question

★★★★★

3. Working individually or in groups, develop a short, programmed learning program on the subject Guidelines for Giving a More Effective Lecture.pg 87

Answered: 1 week ago

Question

★★★★★

2. What role should job descriptions play in training at Apex?

Answered: 1 week ago

Previous Question Next Question