a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with 8% in asset J, 51% in asset K, and 41% in asset L? d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, apply for the answers you will type. Data Table of (Click on the following icon in order to copy its contents into a spreadsheet.) Return on Asset J in Return on Return on State of Probability of State Asset K in Economy Boom Asset L in State State State 0.28 0.070 0.220 0.140 0.280 Growth 0.39 0.070 0.070 0.070 0.200 Stagnant Recession ncut 0.22 0.065 0.075 0.11 0.120 -0.220

a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with 8% in asset J, 51% in asset K, and 41% in asset L? d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, apply for the answers you will type. Data Table of (Click on the following icon in order to copy its contents into a spreadsheet.) Return on Asset J in Return on Return on State of Probability of State Asset K in Economy Boom Asset L in State State State 0.28 0.070 0.220 0.140 0.280 Growth 0.39 0.070 0.070 0.070 0.200 Stagnant Recession ncut 0.22 0.065 0.075 0.11 0.120 -0.220

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 9PROB

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