Asset Management Questions
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I need an elaborate full explanatory step-by-step solution to the 4 questions in the attached file. The solution should be in a Word document file showing the formulas in in each question writing the formulas manually in front of each in order to know and understand clearly the components of the formulas and the topic so that the solution is elaborate enough to understand the topic in each question.. It is urgently needed within six hours maximum.
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Solution Summary
The following posting helps with asset management questions. The components of the formula topics are discussed.
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Answer:
Given that,
Probability Possible Rate of Return Stock (A) Possible Rate of Return Stock (B) Possible Rate of Return Stock (C)
0.5 -10 12 14
0.2 8 10 7
0.3 14 8 -3
Stock Return=∑_(i=1)^n▒〖P_i*k_i 〗
Where,
Pi=Probability
Ki=Return
Stock Rate of return:
Stock (A) rate of return=0.5*-10%+0.2*8%+0.3*14%=0.80%
Stock (B) rate of return=0.5*12%+0.2*10%+0.3*8%=10.4%
Stock (C) rate of return=0.5*14%+0.2*7%+0.3*-3%=7.50%
Standard Deviation:
Standard deviation=√(∑_(i=1)^n▒〖(k_i-k ̂ )^2*P_i 〗)
Where,
Pi=Probability
Ki=Return
K^=Mean return
Therefore,
Standard deviation Stock (A),σ_A=√(〖((-10-0.80)〗^2*0.5)+((8-0.80)^2*0.2)+((14-0.80)^2*0.3) )=10.998
Standard deviation Stock (B),σ_B=√(〖((12-10.4)〗^2*0.5)+((10-10.4)^2*0.2)+((8-10.4)^2*0.3) )=1.74
Standard deviation Stock (A),σ_C=√(〖((14-7.50)〗^2*0.5)+((7-7.50)^2*0.2)+((-3-7.50)^2*0.3) ...
Education
- MBA, Indian Institute of Finance
- Bsc, Madras University
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