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The table below shows the forecasted rate of return based on the prevailing economic conditions. State of economy Probability of the economic state Rate
The table below shows the forecasted rate of return based on the prevailing economic conditions. State of economy Probability of the economic state Rate of Return Boom 25% 12% 6% Normal Recession. Required: Based on the information given: 0.50 0.20 0.30 . Calculate the expected return of the portfolio ANSWER b (i): ANSWER b (ii): (5 marks in total) Calculate the portfolio risk (the variance and standard deviation)
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To calculate the expected return of the portfolio we need to use the weighted average of the rates o...
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
