Question
Refer to the attachment, which provides expected returns for 2 assets- A & B for 3 different states of nature: Boom, Normal, & Recession. Each
Refer to the attachment, which provides expected returns for 2 assets- "A" & "B" for 3 different states of nature: Boom, Normal, & Recession. Each state is considered to be equally probable.
For each of the following calculations, express your answer in percentage terms, rounded to 2 decimal places (ie 22.00).
What is the expected return for Asset A, E(RA)?
What is the expectedstandard deviationin returns for Asset B?
Suppose that a portfolio is created with 75% invested in Asset A & 25% invested in Asset B.
What is the expected return for the portfolio, E(RP)?
What is the expectedstandard deviationin returns for the portfolio?
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