Expected Return and Standard Deviation of Return of Stock Portfolio

The probability that the economy will contract is 0.2. The probability of moderate growth is 0.6, and the probability of a rapid expansion is 0.2. If the economy contracts, you can expect a return on your portfolio of 5 percent. With moderate growth, your return will be 8 percent. If there is a rapid expansion, your portfolio will return 15 percent.
1. What is your expected return?
2. What is the standard deviation of the return?

Solution Preview

Expected return = Sum of (Probability of event i * return when ...

Solution Summary

The solution calculates the expected return and standard error of the stock portfolio

... a. Calculate the expected return and standard deviation of a ... is composed of 35 percent A and 65 percent B when the correlation between the returns on A and ...

... 16-18 below, assume the risk-free rate is 8% and the expected rate of return on the ... What do the investors expect the stock to sell for at the end of the ...

... The solution calculates the expected return, variance, standard...Portfolio Returns and Deviations Consider the following information ... of Rate of Return if State ...

... a. Calculate the expected return and standard deviation of a portfolio... How does the correlation between the returns on A and B affect the standard deviation? ...

...Expected return= 0.1300 Expected Standard deviation= 0.0242. b. Calculate the expected returns and expected standard deviations of a two stock portfolio when r1 ...

... c. Calculate the expected returns for portfolio AB, AC, and BC ... d. Calculate the standard deviations for portfolio AB, AC ... your answer from a risk-return viewpoint ...

... a. Calculate the expected return and standard deviation of a ... is composed fo 35 percent A and 65 percent B when the correlation between the returns on A and ...

... 1- What are the expected return and standard deviation of the returns on stocks A and B? 2- What is the expected return and standard deviation of a ...

... a. Calculate the expected return and standard deviation of a portfolio that is composed of 35% A and 65% B when the correlation between the returns on A ...