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Considering the following information for stock K and stock M, Probability of state Rate of return if State of economy of economy state occurs K
- Considering the following information for stock K and stock M,
Probability of state Rate of return if
State of economy of economy state occurs
K M
Boom 0.3 25% 18%
Normal 0.5 15% 4%
Recession 0.2 -12% 0%
- What is the expected return for stock K? For Stock M?
- What is the standard deviation for Stock K? For stock M?
- What is the coefficient of variation for Stock K? For stock M?
- If you invest 60% of your money in stock K and 40% in stock M, what is the expected return of the portfolio
- Find the return of your portfolio when a) economy is booming; b) economy is normal; and c) recession occurs
vi. What is the standard deviation for your portfolio?
Please show all work, thank you :)
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