Question
Problem 2 - Risk & Return (45 marks) Assume you think a boom and a recession are equally likely to happen, a 50-50 chance of
Problem 2 - Risk & Return (45 marks)
Assume you think a boom and a recession are equally likely to happen, a 50-50 chance of either.
State of Economy
Probability of State of Economy
Security Returns if State Occurs
Security L
Security U
Recession
0.50
-20%
30%
Boom
Assume that your group project team invested $7,000 in security L and $3,000 in security U.
e. What is portfolio return in Recession? (5 marks) f. What is portfolio return in Boom? (5 marks) g. What is expected return of the portfolio? (5 marks) h. What is variance of the portfolio? (5 marks)
i. What is standard deviation of the portfolio? (5 marks)
0.50
70%
10%
Problem 2 - Risk & Return (45 marks)
Assume you think a boom and a recession are equally likely to happen, a 50-50 chance of either.
State of Economy | Probability of State of Economy | Security Returns if State Occurs | |
|
| Security L | Security U |
Recession | 0.50 | -20% | 30% |
Boom
Assume that your group project team invested $7,000 in security L and $3,000 in security U. e. What is portfolio return in Recession? (5 marks) f. What is portfolio return in Boom? (5 marks) g. What is expected return of the portfolio? (5 marks) h. What is variance of the portfolio? (5 marks)
i. What is standard deviation of the portfolio? (5 marks)
| 0.50 | 70% | 10%
|
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Fundamental Accounting Principles Volume II
Authors: Larson Kermit, Jensen Tilly
14th Canadian Edition
71051570, 0-07-105150-3, 978-0071051576, 978-0-07-10515, 978-1259066511
