Question
QUESTION 1 An analyst estimates that a stock has the following return probabilities and returns depending on the state of the economy. Calculate the percentage
QUESTION 1 An analyst estimates that a stock has the following return probabilities and returns depending on the state of the economy. Calculate the percentage expected rate of returns.
Stae of Economy | Prob. | Return |
Good | 0.1 | 19% |
Normal | 0.3 | 11 |
Poor | ? | 7 |
QUESTION 2
Use the following table of states of the economy and stock returns to calculate the percentage standard deviation for Bradley.
|
|
Security Returns if State Occurs | |
| Prob of State of Economy | Roten | Bradley |
Bust | 0.4 | -10% | 32.6% |
Boom | ? | 40 | 5.9 |
QUESTION 3
Use the following table of states of the economy and stock returns to calculate the expected return on a portfolio of 58 percent Roten and the rest in Bradley.
|
| Security if State | Returns Occurs |
| Prob of State of Economy | Roten | Bradley |
Bust | 0.1 | -5% | 27% |
Boom | ? | 49 | 8 |
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