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QUESTION 1 Use the following table of states of the economy and stock returns to calculate the expected return on a portfolio of 49 percent

QUESTION 1

Use the following table of states of the economy and stock returns to calculate the expected return on a portfolio of 49 percent Roten and the rest in Bradley.

Security

if State

Returns

Occurs

Prob of State of Economy

Roten

Bradley

Bust

0.8

-12%

29%

Boom

?

46

7

QUESTION 2

Use the following table of states of the economy and stock returns to calculate the percentage standard deviation of a portfolio of a portfolio of 80 percent Roten and the rest in Bradley.

Security

if State

Returns

Occurs

Prob of State of Economy

Roten

Bradley

Bust

0.2

-12%

30%

Boom

?

37

5

QUESTION 3

Use the following information to calculate the percentage expected return a portfolio that is 39.7 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

3 Dorrs, Inc.

Down Co.

Expected return

23%

13%

Standard deviation

39

9

Correlation

88

QUESTION 4

Use the following information to calculate the percentage standard deviation of a portfolio that is 72.5 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

3 Dorrs, Inc.

Down Co.

Expected return

16%

9%

Standard deviation

50

32

Correlation

0.35

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