EXERCISE 2 From the data below, find the following: [al expected return [b] Standard deviation [c] Variance [d] Coefficient of variation STATE OF THE RETURN (RB) PROBABILITY (Pi) ECONOMY BOOM 40% 0.4 NORMAL 30% 0.3 AVERAGE 16% 0.2 RECESSION 14% 0.1

EXERCISE 2 From the data below, find the following: [al expected return [b] Standard deviation [c] Variance [d] Coefficient of variation STATE OF THE RETURN (RB) PROBABILITY (Pi) ECONOMY BOOM 40% 0.4 NORMAL 30% 0.3 AVERAGE 16% 0.2 RECESSION 14% 0.1

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 2PROB

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Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

Question

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EXERCISE 2
From the data below, find the following:
[a] expected return
[b] Standard deviation
[c] Variance
[d] Coefficient of variation
STATE OF THE
RETURN (RB)
PROBABILITY (Pi)
ECONOMY
BOOM
40%
0.4
NORMAL
30%
0.3
AVERAGE
16%
0.2
RECESSION
14
0.1

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