Use the following information to answer the questions.       State of   Economy Probability of State Return on Asset D in State Return on Asset E in State Return on Asset F in State     Boom   0.34   0.08   0.29   0.19     Normal   0.55   0.08   0.17   0.11     Recession   0.11   0.08   −0.24   −0.09     a.  What is the expected return of each​ asset? b.  What is the variance of each​ asset? c.  What is the standard deviation of each​ asset?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Expected return and standard
deviation.
Use the following information to answer the questions.
 
 
  State of
  Economy
Probability
of State
Return on
Asset D in
State
Return on
Asset E in
State
Return on
Asset F in
State
 
  Boom
 
0.34
 
0.08
 
0.29
 
0.19
 
  Normal
 
0.55
 
0.08
 
0.17
 
0.11
 
  Recession
 
0.11
 
0.08
 
−0.24
 
−0.09
 
 
a.  What is the expected return of each​ asset?
b.  What is the variance of each​ asset?
c.  What is the standard deviation of each​ asset?
 
​Hint: Make sure to round all intermediate calculations to at least seven​ (7) decimal places. The input​ instructions, phrases in parenthesis after each answer​ box, only apply for the answers you will type.
a. What is the expected return of asset​ D?
 
  
​(Round to four decimal​ places.)
What is the expected return of asset​ E?  
 
  
​(Round to four decimal​ places.)
What is the expected return of asset​ F?  
 
 
​ (Round to four decimal​ places.)
b.  What is the variance of asset​ D?  
 
​(Round to four decimal​ places.)
What is the variance of asset​ E?  
 
​(Round to four decimal​ places.)
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