Question
Consider the following two stocks. Probabilities ( pi pi ) Stock A Stock B Recession p1= p1= 29% -7% 4% Normal p2= p2= 37% 9%
Consider the following two stocks.
Probabilities (pipi ) | Stock "A" | Stock "B" | |
Recession | p1=p1= 29% | -7% | 4% |
Normal | p2=p2= 37% | 9% | -12% |
Boom | p3=p3= 34% | 16% | 25% |
The portfolio weights for stocks "A" and "B" are 0.3 and 0.7, respectively.
a. What are the expected returns of stock "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.
E(ra)=Era= 6.740.01
E(rb)=Erb= 5.220.01
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This questions has 4 parts (i.e., you will be clicking "Verify" 4 times)
b. What are the standard deviations of stocks "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.
SDa=SDa= 9.260.01
SDb=SDb= 15.590.01
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c. What is the expected return of the portfolio? Enter your answer as a percentage. Do not put the percent sign in your answer. Round your answer to 2 DECIMAL PLACES.
E(rp)=Erp= 5.680.01
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d. Using the correct answer from the previous question, what is the standard deviation of the portfolio? Enter your answer as a percentage. Do not put the percentage sign in your answer. Round your answer to 2 DECIMAL PLACES.
SDp=SDp=
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pls solve the problem d
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