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Given the choice between two assets with standard deviations of 18.10% each, a
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- Given the choice between two assets with expected returns of 13.5% each, the standard deviation of asset A of 15% and the standard deviation of asset B of 16.5%, a rational investor would choose: O A. either asset. B. asset B. C. asset A. P Type here to searchThe probability distributions of expected returns for the assets are shown in the following table: Asset A Prob Return 0.2 -5% 0.4 10% 0.4 15% a) Calculate the expected return for asset A. b) Calculate the standard deviation for asset A.You are given the following data about Asset A and Asset B. Asset A Asset B Expected returns 8.6% 7.9% Standard Deviation 3.8% 4.6% Assuming that an investor is to choose between Asset A or Asset B, explain which asset a rational investor will choose. c) With the use of a diagram, explain why an investor will always choose a point on the SML line.
- Assume there are only three risky assets in which to invest, A, B and C. The expected return and standard deviation of return of asset A are 0.08 and 0.04, respectively. Similarly, the expected return and standard deviation of return of asset B are 0.1 and 0.05, respectively. Finally, the expected return and standard deviation of return of asset C are 0.07 and 0.02, respectively. The correlation coefficient between the returns of these assets are as follows: PAB-0.5, PAC-0.2 PBC -0.4 You want to form a portfolio composed of these three securities with an expected return of 10% What are the weights of A, B and C in an efficient portfolio with an expected return of 10%?Assume that you have obtained the following information for Asset A: Rate of Return Probability 5.5% 25% 7.25% 55% 11% 20% Compute the expected rate of return for Asset A, using the information provided in thechart above Assume that the standard deviation of the expected returns for Asset A is 1.87%. With information and the expected rate of return that you calculated for Asset A in Part A of this problem, compute the co-efficient of variation for Asset A.You have data on the following assets: asset Expected return Standard DeviationA 15.0% 21.0%B 15.5% 20.2%C 18.0% 25.0% Calculate the coefficient of variation for each of the assets. Which one is the best investment option?
- Given the following probability distribution for assets X and Y, compute the expected rate of return, variance, standard deviation, and coefficient of variation for the two assets. Which asset seems to be a better investment?Assume that we have three assets. The first one has expected return μ1 = 10% and standard deviation of return equal to σ1 = 0.14. The second has expected return μ2 = 20% and standard deviation of return equal to σ2 = 0.2. The third asset has expected return μ3 = 15%. We would like to determine the range of the standard deviation of the third asset so that non of the asset dominates another. This range is an interval with a lower bound a and an upper bound b. What equals the lower bound a of the interval? Please insert your result with two decimals.Expected return and standard deviation a. What is the expected return of asset b?
- Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, is 18.7%; and that the coefficient of variation, CV, is 1.88, answer the following questions: a. Find the standard deviation of returns, sigma Subscript rσr. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.When using present worth to evaluate the attractiveness of a single investment alternative, what value is the calculated PW compared to? a. 0.0b. MARR c. 1.0 d. WACC.What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 10% SDA = 8% WA = 0.25 COVAB = 0.006 Select one: A. 13.75% B. 7.72% C. 12.5% D. 8.79% Asset (B) E(RB) = 15% SDB = 9.5% WB = 0.75