Question
The returns of Railroad United (RIU) are listed below, along with the returns on Major Application of Technology (MAT). Economy 1 (with probability .15) gives
The returns of Railroad United (RIU) are listed below, along with the returns on Major Application of Technology (MAT). Economy 1 (with probability .15) gives a return of -14% for RIU and -9% for MAT. Economy 2 (with probability .15) gives a return of 16% for RIU and 11% for MAT. Economy 3 (with probability .30) gives a return of 22% for RIU and 15% for MAT. Economy 4 (with probability .30) gives a return of 7% for RIU and 5% for MAT. Economy 5 (with probability .10) gives are return of -2% for RIU and -10% for MAT. What is the expected return and standard deviation on a portfolio that is 50% RIU and 50% MAT?
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