Expected return and standard deviation. Use the following information to answer the questions:a. What is the expected return of each asset?b. What is the variance and the standard deviation of each asset?c. What is the expected return of a portfolio with 12% in asset J, 52% in asset K, and 36% in asset L?d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)?Hint: Make sure to round all intermediateanswers you will type.a. What is the expected return of asset J?(Round to four decimal places.)Data table(Click on the following icon in order to copy its contents into a spreadsheet.)Return onAsset J inState ofEconomyBoomGrowthStagnantRecessionProbabilityof State0.240.360.210.19State0.0500.0500.0500.050Return onAsset K inState0.2300.1200.020-0.060Return onAsset L inState0.2500.1900.065- 0.190

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a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with 12% in asset J, 52% in asset K, and 36% in asset L? d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)?

a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with 12% in asset J, 52% in asset K, and 36% in asset L? d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 1Q

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Expected retun and standard deviation. Use the following information to answer the questions: a. What is the expected return of each asset? b. What is the variance and the standard deviation c. What is the expected return of a portfolio with 1 1 Data Table d. What is the portfolio's variance and standard de - X Hint Make sure to round all intermediate calculatio Swers yo (Click on the following icon D in order to copy its contents into a spreadsheet.) a. What is the expected return of asset J? (Round to four decimal places.) Return on Return on Return on Probability of State State of Asset J in Asset Kin State 0.200 0.140 0.040 Asset L in Economy State State Вoom 0.28 0.070 0.260 0.180 Growth 0.37 0.25 0.070 Stagnant 0.070 0.060 -0.210 Recession 0.10 0.070 -0.100 Print Done
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