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There is an 18% chance of a recession, a 65% chance of normal growth, and a 17% chance of expansion. A fund returns -5%, 8%,
There is an 18% chance of a recession, a 65% chance of normal growth, and a 17% chance of expansion. A fund returns -5%, 8%, and 16%, respectively, in each of these scenarios. Calculate, for the COMPLETE portfolio, the (a) expected return, (b) standard deviation, and (c) Sharpe ratio, given you put 63% of your investing dollars in the risky asset, and the risk-free rate is 1%.
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