Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:es
Security Returns if
State Occurs
State of Economy
Probability of
State of Economy
Roll
Ross
Bust
Boom
1.30
.70
-10%
14%
21
5
Calculate the expected return on a portfolio of 45 percent Roll and 55 percent Ross by filling in the following table: (A negative value
should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2
decimal places.)
Probability
State of
Economy
Portfolio Return if
of State of
Product
State Occurs
Economy
Bust
.30
%
%
Boom
.70
%
%
E(Rp)=
%
SAVE
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- Probability State of of State of Economy Economy 0.40 0.60 Bust Boom State of Economy Bust Boom Calculate the expected return on a portfolio of 55 percent Roll and 45 percent Ross by filling in the following table: Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Security Returns if State Occurs Probability of State of Economy Roll -17% 28% 0.40 0.60 Ross 18% 7% Answer is complete but not entirely correct. Portfolio Return if State Occurs 0.04 % 11.40 % E(Rp)= Product 5.50 X % 5.13 % 10.63 %arrow_forwardCompute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Fast Growth Slow Growth Recession Multiple Choice О 18.3 percent О 13.5 percent 40.0 percent О 22.5 percent Probability Return 0.3 40% 0.4 15% 0.3 -15%arrow_forwardConsider the following information: State of Economy Boom Good Poor Bust Probability of State- of Economy a. 15 .55 .25 .05 a. Expected return b-1. Variance b-2. Standard deviation Rate of Return if State Occurs Stock A Stock B Stock C .39 .49 .29 .15 .20 .08 -.09 -.07 -.24 -.10 Your portfolio is invested 24 percent each in A and C, and 52 percent in B. What the expected return of the portfolio? (Do not round intermediate calculations a enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. What is the variance of this portfolio? (Do not round intermediate calculations an round your answer to 5 decimal places, e.g., .16161.) b-2. What is the standard deviation? (Do not round intermediate calculations and ent your answer as a percent rounded to 2 decimal places, e.g., 32.16.) -.01 -.20 % %arrow_forward
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