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Your portfolio consists of $1000 invested in Company A and $4000 invested in Company B. Assume a 25% chance of a recession and predicted returns
Your portfolio consists of $1000 invested in Company A and $4000 invested in Company B. Assume a 25% chance of a recession and predicted returns in each state of economy as shown below:
1.What are your portfolio weights for Company A and Company B?
2.What is your portfolios expected return?
3.What is your portfolios volatility?
State of Economy Probability of State of Economy Recession 60% Boom 40% Rate of Return if State Occurs Company A Company B -8% 15% 38% -2%Step by Step Solution
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