18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, C? 25 percent of the portfolio is invested in stock A and 45 percent is invested in stock C. and State of Economy Probability of Returns if State Occurs State of Economy | Stock A Stock B Stock C Boom 5% 21% 8% 28% Normal 70% 10% 13% 19% Bust 25% -3% 24% -31%

18. What is the standard deviation of the returns on a portfolio that is invested in stocks A, B, C? 25 percent of the portfolio is invested in stock A and 45 percent is invested in stock C. and State of Economy Probability of Returns if State Occurs State of Economy | Stock A Stock B Stock C Boom 5% 21% 8% 28% Normal 70% 10% 13% 19% Bust 25% -3% 24% -31%

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?
Which of the following statement(s) is(are) true? 1) The real rate of interest is determined by the supply and demand for funds. II) The real rate of interest is determined by the expected rate of inflation. III) The real rate of interest is unaffected by actions of the Fed. IV) The real rate of interest is equal to the nominal interest rate plus the expected rate of inflation. III and IV only. I only. OII and III only. O, II, III, and IV only. OI and III only.
You decide to invest in a portfolio consisting of 15 percent Stock X, 51 percent Stock Y, and the remainder in Stock Z. Based on the following information, what is the standard deviation of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock X Stock Y Stock Z Normal .77 10.50% 3.90% 12.90% Boom .23 17.80% 25.80% 17.30% Multiple Choice 5.79% 2.51% 3.35% 8.44% 7.24%
10. Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If State Occurs
Consider the following stock return scenarios for three stocks: Stock Stock A B Economy Up Average Down 8% 5% 0% 2% 3% 4% Stock с 12% 0% -5% If each state of the economy is equally likely, calculate the expected return and population standard deviation for a portfolio invested entirely in Stock A. Which stock should be added to the portfolio to reduce risk?
What is the expected return of an equally weighted portfolio comprised of the following three stocks? State ofEconomy Probability ofState of Economy Rate of Returnif State Occurs Stock A Stock B Stock C Boom .25 .19 .13 .07 Normal .72 .15 .05 .13 Bust .03
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
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)
11.2. Below are the expected returns from both stocks based on the probability of economic conditions. It is desired to create a portfolio from two stocks. It is decided to invest 30% in stock A and 70% in stock B. Stock A State (i) p(i) E(R) Recession 0.50 -40% Neutral 0.40 15% Воom 0.10 30% 1.00 Stock B State (i) p(i) E(R) Recession 0.5 40% Neutral 0.40 15% Вoom 0.1 -20% 1.00 e- If you were a portfolio manager, what type of investors do you recommend this portfolio and why? f- Explain why the beta of the market is always equal to 1 and beta of a treasury bill equal to 0.
What is the expected return of a portfolio consisting of $6,000 stocks G and $4,000 stock H ? State of Probability of Returns if State Occurs Economy State of Economy Stock G (" Stock H ")/(11%) Boom 22% 14% 1% Normal 78% 7% 9% a. 7.2% b. 7.6% c. $7.9% d. 8.3% e. $8.9% 33. Joel Foster is the portfolio manager of the SF Fund, a $1 million hedge fund that contains the following stocks. The required rate of return on the market is 10% and the risk-free rate is 4%. What rate of return should investors expect (and require) on this fund? Stoo Amount bar(A) 270,000 B 330,000 1.4 bar(C) 400,000 0.7 $1,000,000 a. 8.756% b. 9.382% c. 9.921%
> X C|®| D Note: Show your work. What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40 percent in stock T? Probability of State of Economy State of Economy Returns if State Occurs Stock S Stock T Boom Normal 20% 17% 7% 10% 80% 13%