Explore BrainMass
Share

Expected return and standard deviation

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Please see attached.

1-Portfolio expected return you have 10,000 to invest ion a stock portifolio. Your choices are stock x with an expected return of 14 percent and stock y with an expected return of 9 percent .If your goal is creat a portfolio with an expected return of 12.2 percent, how much money will you invest in stock x ? In Stock y ?

2-Calculating expected return based on the following information, calculate the expected rate of return:

State of Economy Probability of state of economy Rate of return if state Occurs

Recession .20 -.05
Norma .50 .12
Boom .30 .25

3-Calculate return and standard deviation based on the following information, calculate the expected return and standard deviation for the two stocks

State of Economy Probability of state of economy Rate of return if state Occus
StockA StockB
Recession .10 .06 -.20
Normal .60 .07 .13
Boom .30 .11 .33

© BrainMass Inc. brainmass.com March 21, 2019, 7:06 pm ad1c9bdddf
https://brainmass.com/business/finance/279480

Attachments

Solution Summary

The solution explains how to calculate the expected return and standard deviation given the probabilities

$2.19