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There are three securities in the market. The following chart shows their possible payoffs: State Probability of Outcome Return on Security 1 Return on Security

There are three securities in the market. The following chart shows their possible payoffs:

State Probability of Outcome Return on Security 1 Return on Security 2 Return on Security 3
1 .16 .194 .194 .044
2 .34 .144 .094 .094
3 .34 .094 .144 .144
4 .16 .044 .044 .194

a-1.

What is the expected return of each security? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 1- ____%

Security 2- ____%

Security 3- ____%

a-2.

What is the standard deviation of each security? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 1- ____%

Security 2- _____%

Security 3- ______%

b-1.

What are the covariances between the pairs of securities? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 5 decimal places, e.g., 32.16162.)

Security 1 & 2- ____%

Security 1 & 3- ____%

Security 2 & 3- ____%

b-2.

What are the correlations between the pairs of securities? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Security 1 & 2- ____%

Security 1 & 3- ____%

Security 2 & 3- ____%

c-1.

What is the expected return of a portfolio with half of its funds invested in Security 1 and half in Security 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 1 & 2- ____%

c-2.

What is the standard deviation of a portfolio with half of its funds invested in Security 1 and half in Security 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 1 & 2- _____?

d-1.

What is the expected return of a portfolio with half of its funds invested in Security 1 and half in Security 3? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 1 & 3- ____%

d-2.

What is the standard deviation of a portfolio with half of its funds invested in Security 1 and half in Security 3? (Leave no cells blank - be certain to enter "0" wherever required.)

Security 1 & 3- _____%

e-1.

What is the expected return of a portfolio with half of its funds invested in Security 2 and half in Security 3? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 2 & 3- ____%

e-2.

What is the standard deviation of a portfolio with half of its funds invested in Security 2 and half in Security 3? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Security 2 & 3- ____%

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