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Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. State of the Economy Recession Below Average Average Above Average Boom Mean Standard Deviation Coefficient of Variation Covariance with MP Probability 0.2 0.1 0.3 0.3 0.1 % Return on T-Bills, Stocks and Market Index Pay-Rubber- T- Bills 7 7 7 7 7 Phillips -22 -2 20 35 50 up 28 14.7 0 -10 -20 made 10 -10 7 45 30 Market Index -13 1 15 29 43

Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. State of the Economy Recession Below Average Average Above Average Boom Mean Standard Deviation Coefficient of Variation Covariance with MP Probability 0.2 0.1 0.3 0.3 0.1 % Return on T-Bills, Stocks and Market Index Pay-Rubber- T- Bills 7 7 7 7 7 Phillips -22 -2 20 35 50 up 28 14.7 0 -10 -20 made 10 -10 7 45 30 Market Index -13 1 15 29 43

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 4P: Investment advisors estimated the stock market returns for four market segments: computers,...
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Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. State of the Economy Recession Below Average Average Above Average Boom Mean Standard Deviation Coefficient of Variation Covariance with MP Probability 0.2 0.1 0.3 0.3 0.1 % Return on T-Bills, Stocks and Market Index Pay-Rubber- made 10 -10 7 45 30 T- Bills 7 7 7 7 7 Phillips -22 -2 20 35 50 up 28 14.7 0 -10 -20 Market Index -13 1 15 29 43
Transcribed Image Text:Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. State of the Economy Recession Below Average Average Above Average Boom Mean Standard Deviation Coefficient of Variation Covariance with MP Probability 0.2 0.1 0.3 0.3 0.1 % Return on T-Bills, Stocks and Market Index Pay-Rubber- made 10 -10 7 45 30 T- Bills 7 7 7 7 7 Phillips -22 -2 20 35 50 up 28 14.7 0 -10 -20 Market Index -13 1 15 29 43
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Can you provide a manual written working of calculating CAPM Req. Return and beta 

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Using the data generated in the previous question (Question 1)

  1. Plot the Security Market Line (SML)
  2. b) Superimpose the CAPM’s required return on the SML
  3. c) Indicate which investments will plot on, above and below the SML?
  4.  
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Can you show how to calculate the variance step by step without using excel 

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hello, New to this. why is the variance added to the table 

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Can you provide a manual written working of calculating covariance with MP?  I am very much still confused. 

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