Solved: Expected return-standard deviation of the returns, Finance Basics

+44 141 628 6080
[email protected]

Expected return-standard deviation of the returns

State of the economy    Probability    End of Period Return
Stock A    Stock B

Good    0.3    20%    21%
Average   0.5    16%    15%
Bad         0.2    11%    7%

Q1- What are the expected return and standard deviation of the returns on stocks A and B?

Q2- What is the expected return and standard deviation of a portfolio of 20% in A and 80% in B?

Q3- What is the expected return and standard deviation of a portfolio with 80% in A 4- Which one of the two portfolios should be selected by a risk averse investor? Why?

View Complete Question

Solution Preview :

Prepared by a verified Expert

Finance Basics: Expected return-standard deviation of the returns

Reference No:- TGS01826230

Now Priced at $25 (50% Discount)

Recommended (98%)

Rated (4.3/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Finance Basics

Q : Hand-draw a network diagram of network configuration

Using the IP addresses provided by your instructor, hand-draw a network diagram of your network configuration.

Q : Small company to help design their network

You've been hired by a small company to help design their network. So far, they've released the following requirements:

Q : What is the companys mission statement

What is the company's mission statement? What is the company's vision statement?

Q : Short position-calls-puts-portfolio insurance

Describe call and put options, and explain why someone would want to deal in options rather than in the underlying asset.

Q : Expected return-standard deviation of the returns

What are the expected return and standard deviation of the returns on stocks A and B?

Q : Expect the return for small capitalization stocks

Question: If this year is consistent with historical trends you would expect the return for small capitalization stocks to be:

Q : Money in the stock market

Assume that you have decided to invest a portion of your money in the stock market.

Q : What is put-call parity

What is put-call parity and why does it hold? Please show your proof?

Q : The keller fund option investment strategies

If you owned Lotus's stock, but were concerned about the possibility of bad news, how might you use options to protect yourself against risk of price decline?

1936709

Questions
Asked

3,689

Active Tutors

1443468

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Asked Questions

Introduction for a mock research paper

How do i turn this into a introduction for a mock research paper? The COVID-19 pandemic has left a lasting impact on people from around the world.

What is the puzzle in the tomasello reading

In the Tomasello reading, what is the puzzle? Group of answer choices Causation: tool use and intelligence have a chicken-and-egg relationship.

What are pros of the intervention in behavioral management

What are the pros of the intervention in the behavioral management approach of mindfulness training for pain management?

Develop understanding of emotional and socio-cultural lived

Critically evaluate object relational (modern) psychodynamic theory Develop an understanding of the emotional and socio-cultural lived experience

Child with slow-growing tumor in brain left hemisphere

Sierra is a child with a slow-growing tumor in her brain's left hemisphere. As this tumor has disrupted language processing,

What are some examples of independent variables

What are some examples of independent variables that can impact outcomes of dependent variables; each offers a predisposition to act/respond

Describe curriculum controversy in early childhood education

Question: Which of the following statements describe the curriculum controversy in early childhood education?