18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, and C? 35 percent of the portfolio is invested in stock A and 50 percent is invested in stock C. State of Economy Probability of Returns if State Occurs State of Economy | Stock A Stock B Stock C Boom 10% 26% 9% 33% Normal 55% 12% 15% 22% Bust 35% -4% 28% -38%

18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, and C? 35 percent of the portfolio is invested in stock A and 50 percent is invested in stock C. State of Economy Probability of Returns if State Occurs State of Economy | Stock A Stock B Stock C Boom 10% 26% 9% 33% Normal 55% 12% 15% 22% Bust 35% -4% 28% -38%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected return and standard deviation of a portfolio invested 30% in Stock A and 70% in Stock B?
18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, andC? 40 percent of the portfolio is invested in stock A and 35 percent is invested in stock C.State of Economy Probability ofState of EconomyReturns if State OccursStock A Stock B Stock CBoom 15% 13% 5% 17%Normal 65% 6% 8% 11%Bust 20% -2% 14% -19%19. Your portfolio has a beta of 0.80. The portfolio consists of 30 percent Treasury bills, 50percent stock A, and 20 percent stock B. Stock A has a risk-level equivalent to that of theoverall market. What is the beta of stock B?20. CEPS Group stock has a beta of 1.15. The risk-free rate of return is 4.75 percent and themarket risk premium is 7.5 percent. What is the expected rate of return on this stock?
18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, and C? 20 percent of the portfolio is invested in stock A and 45 percent is invested in stock C. State of Economy Probability of Returns if State Occurs Stock C 11% 8% -13% State of Economy Stock A Stock B Вoom 20% 9% Normal Bust 55% 25% 4% -2% 3% 5% 10%
2. What is the expected return and standard deviation on a portfolio which is invested 25 percent in stock A, 55 percent in stock B, and the remainder in stock C? State of economy Boom Normal Recession Probability of state of economy 5% 45% 50% Stock A 19% 11% -23% Returns if state occurs Stock B 9% 8% 5% Stock C 6% 13% 25%
What is the standard deviation of the returns on a $60,000 portfolio which consists of stocks S and T? Investment in stock S is valued at $24,000. State of Economy Probability of State of Economy Return if State Occurs Stock S Stock T Boom 5% 11% 5% Normal 85% 8% 6% Recession 10% -5% 8%
Accounting Use the following information: Stock A B Good state 12% 17% Bad state 0% -1% Assume there is 60% probability that the good state occurs and 40% chance the bad state occurs. What is the expected return of a portfolio that is 9% invested in stock A and 1-9% invested in B? (Please use 5 decimal places, this should be written in percentage return, so an answer of 23.143% should be written at .23143)
Given the following information, what is the expected return on a portfolio that is invested 30 percent in both Stocks A and C, and 40 percent in Stock B? State of Probability of Rate of Return If State Occurs Economy State of Economy Stock A Stock B Stock C Вoom .05 7.8% 23.6% 18.4% Normal .85 9.1% 15.4% 13.7% Recession .10 11.8% -12.3% 6.4% 3
6. Stock A and B have expected return and standard deviation respectively as follow Stock Expected return Standard deviation A 11% 13% B 23% 18% Correlation between A and B= 0.45 Risk-free rate = 4% %3D a) Which portfolio should be invested if investor is considering between Risky portfolio 1 (30% in stock A and 70% in stock B) and portfolio 2 (25% in stock A and 75% in stock B) b) If Investor add a risk-free asset C with a return of 5% into the risky portfolio that was choosed in part (a) to form a complete portfolio. What should the optimal proportions of risky portfolio and risk-free asset for an investor whose degree of risk aversion is 3. c) Calculate the expected return and standard deviation of the complete portfolio
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