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Question 1: Introduction to Financial Management Principles of Finance Solve the following parts A and B A) A portfolio consists of four stocks along. The table below shows the number of shares held in each stock, the price per share paid for each stock and the expected return on each stock. Calculate the expected return on the portfolio. All three steps of calculations must be shown, or marks will be deducted. Stock Number of Shares Price per Share Expected Return 200 7.50 12% B 400 8.25 10% 250 10.00 8% D 500 12.00 14% B) In the following, the probabilities of the different states of the economy and the associated rate of return for each state are given. State of Economy Probability of State Rate of Return of Economy (P) (r) Recession 0.3 - 12% Most likely 0.5 6% Boom 0.2 11% a) Calculate the expected rate of return b) Calculate the variance c) Calculate the standard deviation (1 mark) (2 marks) (0.5 marks)Step by Step Solution
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