Purchase Solution

expected rate of return and standard deviation for each investment

Not what you're looking for?

Ask Custom Question

I need your help finding the answers to these questions with the following data:

Considering the following Scenario Analysis:

RATE OF RETURN
Scenerio Probability Stocks Bonds
Recession .20 -5% +14%
Normal economy .60 +15 +8
Boom .20 +25 +4

a. Is it reasonable to assume that Treasury Bonds will provide higher returns in recessions than in booms?

b.How do I calculate the expected rate of return and standard deviation for each investment?

c. Which investment would you prefer?

Can you help me with the meaning of abbreviations and formulas if used and a brief description on each of the above questions.

Thank you your help is GREATLY appreciated.

Purchase this Solution
Solution Summary

Accounting scenarios are included.

Solution Preview

a. Is it reasonable to assume that Treasury Bonds will provide higher returns in recessions than in booms?
The expected return of bonds during recession is 0.20*14% = 2.8%
and the ...

Purchase this Solution
Free BrainMass Quizzes
Lean your Process

This quiz will help you understand the basic concepts of Lean.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Expected return,standard deviation, coefficient of variation

    366945 Expected return, standard deviation and coefficient of variation USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEMS Your expectations from a one year investment in HiTech Computers is as follows: Probability Rate of Return .15

  • Scenario & Portfolio Analysis for a Return on Stocks and Bonds

    How do I calculate the expected rate of return and standard deviation for each investment? c. And which investments would you prefer?

  • Expected rate of return and standard deviation

    Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Scenario Analysis.

  • Return on Stocks and Bonds

    b)  Calculate the expected rate of return and standard deviation for each investment.         c)  Which investment would you prefer?

  • Assets: Minimum Variance Portfolio; Yield Expected Return

    Question 1: To determine the investment proportions in the minimum-variance portfolio of the two risky assets, the expected value and standard deviation of its rate of return.

  • Corporate Investment Analysis

    Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.)

  • Return & Volatility

    Borrowing is risk free, hence volatility (standard deviation) of bprrowing =0 Therefore, expected return of investment= w1 r1 + w2 r2 and volatility (standard deviation) of investment= w1 s1 as other terms with s2 drop out of the

  • Margin interest, yield, holding period return, Sharpe measure

    Her portfolio's expected rate of return and standard deviation are _____ and ____ respectively. a. 10% and 6.7% b. 12% and 22.4% c. 12% and 15.7% d. 10% and 35% 9. A portfolio is composed of two stocks. A and B.

  • probability for this investment

    Rate of Return X, % Probability, Pi -20 0.10 -10 0.15 10 0.45 25 0.25 30 0.05 a) Calculate the expected rate of return, E(X). b) Calculate the Variance and the Standard deviation of the returns.

View More Related Solutions