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You have the following information on the expected performance of three companies in the next year: Boom Stable Recessione Loki Puzzles and 15% 7.5% -10%
You have the following information on the expected performance of three companies in the next year: Boom Stable Recessione Loki Puzzles and 15% 7.5% -10% Games Freya Cosmetics 12%e 6% -1% Aegir Breweries 12% 6% 1% Economists think there is a 25% probability of a boom, a 50% probability of a stable economy and a 25% probability of a recession. a) Calculate the expected return for each of the three companies -2 Click here to enter text. (2 Marks) b) Calculate the standard deviation for each of the three companies Click here to enter text. (3 Marks) c) Based on the expected return and standard deviation, identify which company we should definitely NOT invest in if we were to invest in just one company. Justify your answer. Click here to enter text. (2 Marks) d) You have opted to build a portfolio that is 40% Loki Puzzles and Games and 60% Aegir Breweries. If these two companies have a correlation coefficient of -0.2, what is the expected portfolio return and standard deviation? Click here to enter text
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