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PLEASE SHOW WORK ON PAPER (so I can understand steps taken) You have 50,000 dollars that you plan to invest in a portfolio with two

PLEASE SHOW WORK ON PAPER (so I can understand steps taken)

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You have 50,000 dollars that you plan to invest in a portfolio with two stocks, A and B. The price of stock A is currently $20. You expect that the stock price will be: A) $60 if the economy is booming (which could happen with probability 25%), B) $25 if the economy continues at its current state (which could happen with probability 40%) C) $5 if the economy is in recession (which could happen with probability 35%) The price of stock B is currently $40. You expect that the stock price will be: A) $47 if the economy is booming (which could happen with probability 25%), B) $43 if the economy continues at its current state (which could happen with probability 40%) C) $39 if the economy is in recession (which could happen with probability 35%) Calculate the following: i) Find the expected return, standard deviation, and coefficient of variation for stocks A and B (separately). ii) Assume that you invest $10,000 in stock A and $40,000 in stock B. What are the portfolio weights? iii) Find the expected return and standard deviation of the portfolio with the weights of part (ii). iv) Find the coefficient of variation for the portfolio. v) Does the portfolio reduce the coefficient of variation? You have 50,000 dollars that you plan to invest in a portfolio with two stocks, A and B. The price of stock A is currently $20. You expect that the stock price will be: A) $60 if the economy is booming (which could happen with probability 25%), B) $25 if the economy continues at its current state (which could happen with probability 40%) C) $5 if the economy is in recession (which could happen with probability 35%) The price of stock B is currently $40. You expect that the stock price will be: A) $47 if the economy is booming (which could happen with probability 25%), B) $43 if the economy continues at its current state (which could happen with probability 40%) C) $39 if the economy is in recession (which could happen with probability 35%) Calculate the following: i) Find the expected return, standard deviation, and coefficient of variation for stocks A and B (separately). ii) Assume that you invest $10,000 in stock A and $40,000 in stock B. What are the portfolio weights? iii) Find the expected return and standard deviation of the portfolio with the weights of part (ii). iv) Find the coefficient of variation for the portfolio. v) Does the portfolio reduce the coefficient of variation

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