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Hi, I need to solve this in excel but I am unsure how to proceed. If you could use values instead of cell references it
Hi, I need to solve this in excel but I am unsure how to proceed. If you could use values instead of cell references it would be much appreciated so I can learn the process and explanation.
Question 5: | ||||
The returns for two assets, A and B, have been estimated under different scenarios in the year ahead as follows: | ||||
Scenario | Probability | Asset A Return | Asset B Return | |
Deep Recession | 20% | -5,30% | -1,50% | |
Mild Recession | 30% | -1,50% | 1,70% | |
Normal Conditions | 30% | 5,80% | 5,20% | |
Good Economic Conditions | 15% | 16,00% | 7,90% | |
Great Economic Conitions | 5% | 23,70% | 12,30% | |
*Assume that the returns of the two assets have a correlation of 0.15 | ||||
(a) Calculate the Expected Return and the Standard Deviation for each of these assets separately. | ||||
(b) Assuming these are the only two investment options available to you, prepare the efficient frontier, showing the varios risk-return profiles you could achieve by investing in different combinations (weights) of these assets. | ||||
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