Assume that the risk-free interest rate (guaranteed by government bonds) is 4% (annual), and there a stock with current value S(0) = 50 and the 1-year values are S(1) = { 60 with probability 0.8, 45 with probability 0.2. %3D (b) Compute the risk (as measured by the standard deviation of the yearly rate of return) of the portfolio.

Assume that the risk-free interest rate (guaranteed by government bonds) is 4% (annual), and there a stock with current value S(0) = 50 and the 1-year values are S(1) = { 60 with probability 0.8, 45 with probability 0.2. %3D (b) Compute the risk (as measured by the standard deviation of the yearly rate of return) of the portfolio.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 4P

See similar textbooks