Question
You are going to make a portfolio consisting of 60 % of Bank of America Stock and 40 % of Caterpillar Stock. You also have
You are going to make a portfolio consisting of 60 % of Bank of America Stock and 40 % of Caterpillar Stock. You also have the following information:
| State i | Probability of State i | BOA Return | Caterpillar Return |
|---|---|---|---|
| Boom | 70 % | 19 % | 19 % |
| Bust | 30 % | -5 % | -7 % |
1. What is the expected return for the portfolio? (Answer as a percentage and Round to 2 decimals)
2. What is the standard deviation for the portfolio? (Answer as a percentage and Round to 2 decimals)
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Capital Budgeting
Authors: Pamela P. Peterson
1st Edition
0471218332, 9780471218333
