The expected return and probability distribution of returns, Ask an Expert

Finance

The expected return and probability distribution of returns of assets X and Y are given below:

Economic State Pi Return (X) Return (Y)

1 0.1 25% 20%

2 0.3 20% 15%

3 0.2 15% 25%

4 0.4 10% 13%

Required:

1.Compute the expected risk and returns of the portfolio with 50% investment in asset X 2. Calculate the portfolio risk assuming that the correlation of the two assets X and Y are: 1.-1 2.0 3.+1 3.Draw a portfolio opportunity set curve. 4.What are the implications of portfolio theory?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91890872

Have any Question?Write your Review or question?

Related Questions in Basic Finance

What financial institutions do you use or is there a bank

What financial institutions do you use? Or is there a bank or other financial institution that you wish to try out? Describe this financial institution, including the services they offer. What types of savings plans are ...

Assume that a firm could borrow 100 billion dollars the

Assume that a firm could borrow 100 billion dollars. The most straightforward value from the leveraged recapitalization that people would estimate is the present value of interest tax shield. Assume the cost of debt is 0 ...

Suppose a firm uses sales teams to market their products

Suppose a firm uses sales teams to market their products. For example, a construction equipment manufacturer may assign three sales agents to a team so each team member can specialize in particular product functions (e.g ...

Joshua borrowed 500 on january 1 2017 and paid 25 in

Joshua borrowed $500 on January 1, 2017, and paid $25 in interest. The bank charged him a service charge of $10. He paid it all back at once on December 31, 2017. What was the APR? (Enter your answer as a percent rounded ...

The copy department at microsoft wants to incorporate eva

The copy department at Microsoft wants to incorporate EVA in their business model. They want to explain how they can use EVA to price their copy services instead of giving free copies to departments. How would you help t ...

How does the bid-ask spread affect market orders vs limit

How does the bid-ask spread affect market orders vs limit orders? (Does it related to a narrow/wide spread?)

If the interest rate is 7 percent what is the value of the

If the interest rate is 7 percent, what is the value of the following three investments? An investment which offers you $100 a year in perpetuity with the payment at the end of each year, A similar investment with the pa ...

Robert sampson owns a townhouse value at 186000 and still

Robert Sampson owns a townhouse value at $186,000 and still has an unpaid mortgage of $151,000. In addition to his mortgage, he has the following liabilities: Visa$760 MasterCard 390 Discover card 560 Education loan 2,30 ...

Christina is considering a project that will require 534000

CHRISTINA is considering a project that will require $534,000 for fixed assets, $218,000 for inventory, and $41,000 for accounts receivable. Short-term debt is expected to increase by $165,000. The project has a six-year ...

What is the 5 var in terms of holding period return for a

What is the 5% VaR (in terms of holding period return) for a portfolio with normally distributed returns, a mean return of 20%, and a standard deviation of returns of 40%?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert