Question
You own three stocks and have estimated the following joint probability distribution of returns: Market Condition Probability of Occurence Return on Stock A Return on
You own three stocks and have estimated the following joint probability distribution of returns:
| Market Condition | Probability of Occurence | Return on Stock A | Return on Stock B | Return on Stock C | Return on Stock D |
| Growth | 35% | 10 | 80 | 90 | 30 |
| Normal | 40% | 40 | 20 | 10 | 30 |
| Recession | 25% | 80 | -10 | -30 | 30 |
- Calculate the portfolios expected return and standard deviation if you invest 35% in Stock A, 35% in Stock B, 30% in Stock C.
- Calculate the portfolios expected return and standard deviation if you invest 25% in Stock A, 25% in Stock B, 25% in Stock C, 25% in Stock D,.
Don't send excel solution. Please explain more detailed
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Finite Mathematics and Its Applications
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair
12th edition
978-0134768632
