EBK MINDTAP FOR KELLER'S STATISTICS FOR
11th Edition
ISBN: 9780357110676
Author: KELLER
Publisher: VST
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Question
Chapter 7.3, Problem 74E
To determine
Calculate the expected value and standard deviation.
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The beta of an active portfolio is 1.45. The standard deviation of the returns on the market inde
is 22%. The nonsystematic variance of the active portfolio is 3%. The standard deviation of the
returns on the active portfolio is
a) 36.30%.
b) 5.84%.
c) 19.60%.
d) 24.17%.
e) 26.0%.
Given the following information, what is the standard deviation of the returns on a portfolio that is invested 35 percent in both Stocks A and C, and 30 percent in Stock B? (see attached chart)
You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The following table represents the annual return (per $1,000) of each of these investments under various economic conditions and the probability that each of those economic conditions will occur.
Compute the expected return for the corporate bond and for the common stock fund. Show your calculations on excel for expected returns.
Compute the standard deviation for the corporate bond fund and for the common stock fund.
Would you invest in the corporate bond fund or the common stock fund? Explain.
If choose to invest in the common stock fund and in (c), what do you think about the possibility of losing $999 of every $1,000 invested if there is depression. Explain.
Chapter 7 Solutions
EBK MINDTAP FOR KELLER'S STATISTICS FOR
Ch. 7.1 - Prob. 1ECh. 7.1 - Prob. 2ECh. 7.1 - Prob. 3ECh. 7.1 - Prob. 4ECh. 7.1 - Prob. 5ECh. 7.1 - Prob. 6ECh. 7.1 - Prob. 7ECh. 7.1 - Prob. 8ECh. 7.1 - Prob. 9ECh. 7.1 - Prob. 10E
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