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Suppose you have a 3-asset portfolio (portfolio P) that is invested 25% in Asset 1, 60% in Asset 2 and 15% in Asset 3. Use
Suppose you have a 3-asset portfolio (portfolio P) that is invested 25% in Asset 1, 60% in Asset 2 and 15% in Asset 3. Use the table below to calculate the expected return, expected standard deviation and expected coefficient of variation of your portfolio P.
state | Probability | asset1 rate of return | asset2 rate of return | asset3 rate of return |
Boom | 10% | 28% | 40% | 15% |
good growth | 25% | 22% | 25% | 10% |
poor growth | 45% | -7% | 0% | 5% |
recession | 20% | 2% | -15% | 0% |
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