Question
There are two assets and two states of the economy. State of Economy Probability of State Rate of Return of Stock A Rate of Return
There are two assets and two states of the economy.
| State of Economy | Probability of State | Rate of Return of Stock A | Rate of Return of Stock B |
| Recession | 0.40 | -15% | 6% |
| Boom | 0.60 | 20% | 10% |
Suppose you have $30,000 total. If you put $9,000 in Stock A and the remainder in Stock B, What will be the expected return and standard deviation on your portfolio?
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
11th Edition
1264413041, 9781264413041
