Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 Ms. Alya Jawaher is interested to invest her funds in Bahrains telecommunication sector and considering two stocks: Zain and STC. A total of

Question 2

Ms. Alya Jawaher is interested to invest her funds in Bahrains telecommunication sector and considering two stocks: Zain and STC. A total of 57% of her portfolio is allocated to Zain stock, whereas 43% invested in STC stock.

The rate of return for each stock across different economic scenarios are given in below table:

Rate of Return

Economic Situation

Probability

Zain

STC

Portfolio

squared deviation

Burst

33.3%

-7%

17%

Normal

33.3%

12%

7%

Boom

33.3%

28%

-3%

Expected return

Variance

Standard Deviation

Answer the below questions:

  1. Calculate the expected return for Zain stock and STC stock (2 marks)
  2. Calculate the variance for Zain stock and STC stock (2 marks)
  3. Calculate the standard deviation for Zain stock and STC stock (2 marks)
  4. Calculate the portfolios expected return (2 marks)
  5. Calculate the portfolios variance (2 marks)
  6. Calculate the portfolios standard deviation (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Risk Manager Handbook

Authors: Philippe Jorion, Global Association Of Risk Professionals

5th Edition

0470479612, 978-0470479612

More Books

Students also viewed these Finance questions

Question

What are negative messages? (Objective 1)

Answered: 1 week ago