Calculate the expected return. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

 

 

 

  Expected return [removed]  %

 

 

 

Calculate the standard deviation. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

 

 

 

  Standard deviation [removed]  %

 

 

 

Q2.Consider the following information:

 

 

 

  Rate of Return if State Occurs
  State of Probability of

  Economy State of Economy Stock A Stock B Stock C
  Boom   .15     .37     .47     .27  
  Good .45 .22 .18 .11
  Poor .35 .04 .07 .05
  Bust .05 .18 .22 .08

 

 

 

a. Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

 

 

 

  Expected return [removed] %

 

 

 

b1. What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161))

 

 

 

  Variance [removed]

 

 

 

b2. What is the standard deviation? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

 

 

 

  Standard deviation [removed] %

 

 

 

 

 

Q3.Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.7 percent, the reward-to-risk ratios for stocks Y and Z are [removed] and [removed] percent, respectively. Since the SML reward-to-risk is [removed] percent

 

Q4. Based on the following information:

 

 

  State of
Economy
Return on
Stock A
Return on
Stock B
  Bear .107 −.050
  Normal .110 .153
  Bull .078 .238

 

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