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This question is worth 10 marks in total. This is a written calculation question, and you should perform the necessary calculations/working on paper to later

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This question is worth 10 marks in total. This is a written calculation question, and you should perform the necessary calculations/working on paper to later be scanned and uploaded. Start a new page for this question. For dollar amounts, give your answer to the nearest cent. For interest rates, give our answer as a percentage rounded to 2 decimal places. If any parts of the question use value from earlier parts, use the EXACT values from earlier parts. QUESTION START Hydra Capital offers a range of 1-year investment products for customers. The details for two such investment products are as follows: "Investment A" is a security tied to market performance. For an initial investment of $100, the security, one year from today, will be worth: $140 if the market is "good" $105 If the market is "moderate", and $80 if the market is "bad". "Investment B' is a security also tied to the performance of the market. However, it performs better the worse the market is doing. For an initial investment of $100, the second security, one year from today, will be worth: $70 If the market is "good" $90 if the market is moderate", and $170 if the market is "bad". Bob is a prospective investor looking at Hydra Capital's investment products. He has studied the market and concludes that over the coming year, there is a 30% chance the economy will be "good", a 45% chance the market will be "moderate", and a 25% chance the market will be "bad". a) If Bob spends $100 on "Investment A", what is his expected return for the year, assuming he is correct about the economy over the coming year? (2 marks) b) What is the variance and standard deviation for the return on investment A"? (2 marks) c) If Bob spends $100 on investment B", what is his expected retum for the year? (2 marks) Bob considers both products, and ultimately decides to spend $700 on "Investment A" and $300 on investment B" to construct his investment portfolio. d) Determine the value of Bob's portfolio after one year under each of the three possibilities for the market. Clearly label each case. (1 mark) e) What is the expected return on Bob's portfolio? (1 mark) f) Calculate the variance and standard deviation of the retum on Bob's portfolio. (2 marks

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