Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have the below information about the expected returns of Lembas LLC, Rivendell LCC, and Arda Capital for the coming year, which each heavily depend

image text in transcribed
image text in transcribed
You have the below information about the expected returns of Lembas LLC, Rivendell LCC, and Arda Capital for the coming year, which each heavily depend on the state of the economy: Economic Lembas Rivendell Arda State Probability LLC. LLC Capital Boom 0.17 19.00% -25.00% 35.00% Normal 0.48 8.00% 0.00% 16.00% Recession 0.31 -5.00% 27.00% -5.00% Crisis 0.04 -9.00% 37.00% -18.00% You currently own a portfolio that of which 37.0% of its value consists of shares of Lembas LLC, 36.0% of its value comes from Rivendell LLC, and the remainder comes from Arda Capital. A) What is the expected return of each of the three firms in the coming year? (Round each of your answers to two decimal places) Lembas LLC: % Rivendell LLC: % Arda Capital: % B) What is the expected return on your portfolio? % (Round your answer to two decimal places) C) What is the expected standard deviation of your portfolio's return in the coming year? % (Round your answer to two decimal places)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John C. Hull

11th Edition

013693997X, 9780136939979

More Books

Students also viewed these Finance questions