Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

NEED THE ER AND STD.DEV OF the portfolio for the additional investment An investor is considering the purchase of Gryphon stock, which has returns given

image text in transcribedimage text in transcribedNEED THE ER AND STD.DEV OF the portfolio for the additional investment

An investor is considering the purchase of Gryphon stock, which has returns given in the table below. Scenario Recession Probability 10.27 0.55 19.18 Rate of Return 11% 9% 20% Normal Economy Boom Calculate the expected return and standard deviation of Gryphon. Round your answers to 2 decimal places. Enter your answers below. E(T) = 8.82 Correct response: 8.82% This question has 6 parts (.e., you will be clicking "Verify" 6 times) Std. Dev. = 6.25 Correct response: 6.25+0.01% The investor decides to diversify by investing $8,000 in Gryphon stock and $10,000 in Royal stock, which has an expected return of 9% and a standard deviation of 10.9%. The correlation coefficient for the two stocks' returns is 0.9. Calculate the expected return and standard deviation of the portfolio. Round your answers to 2 decimal places. Enter your answers below. E(rp) = 8.92 Correct response: 8.92 Std. Dev. = 8.64 Correct response: 8.64+0.01 Suppose the investor decides to invest an additional $2,000 in a treasury bill yielding 3.5%. What will be the expected return and standard deviation of this portfolio Round your answers to 2 decimal places. E(Tp) = B5%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

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

The Emotion Behind Money Building Wealth From The Inside Out

Authors: Julie M. Murphy

1st Edition

979-8598954188

More Books

Students also viewed these Finance questions