chapter-11-homework

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

1.

value:
2.50 points

Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. Assuming that all three states are equally likely. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)

State of
Economy

Security Return
If State Occurs

Recession

–9

%

Normal

16

Boom

25


2.

value:
2.50 points

Security Returns If State Occurs

State of

Probability of


Economy

State of Economy

Roll

Ross

Bust

.30

-16

%

14

%

Boom

.70

21

5


Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals): (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your E(R) answers to 2 decimal places and your Product answers to 4 decimal places. Omit the “%” sign in your response.)

Roll

Ross



State of Economy

Probability of
State of Economy

Return If
State Occurs

Product

Return if
State Occurs

Product

Bust

.30

%

%

Boom

.70

%

%




E(R) =

%

E(R) =

%





3.

value:
2.50 points

Use the following information to calculate the expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)

3 Doors, Inc.

Down Co.

Expected return, E(R)

19

%

14

%

Standard deviation, σ

49

51

Correlation

.34


Expected return

%

Standard deviation

%

Save & Exit Submit

4.

value:
2.50 points

Consider two stocks, Stock D, with an expected return of 20 percent and a standard deviation of 35 percent, and Stock I, an international company, with an expected return of 8 percent and a standard deviation of 23 percent. The correlation between the two stocks is –.21. What is the weight of each stock in the minimum variance portfolio? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

Weight of Stock D

Weight of Stock I

More to explorer

Effective Employment Feedback

After you’ve completed this week’s assigned reading, watch the video below. You can utilize the video and outside sources to answer the

Heat Of Dissolution

I need a hand wrapping up these questions please.  LabHeatofdissolution

Answer:

Title: chapter-11-homework

This question has been Solved!

Click the button below to order this solution.

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat