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Use the following table of states of the economy and stock returns to answer the review problems: Security Returns If State Occurs State of Economy Probability of State of Economy

Use the following table of states of the economy and stock returns to answer the review problems:

 

Security   Returns If State Occurs

State of Economy

Probability of State of Economy

Roten

Bradley

Bust

0.4

-10%

30%

Boom

0.6

40

10

 

1

   

1. Expected Returns Calculate the expected returns for Roten and Bradley.

2. Standard Deviations Calculate the standard deviations for Roten and Bradley.

3. Portfolio Expected Returns Calculate the expected return on a portfolio of 50 percent Roten and 50 percent Bradley.

4. Portfolio Volatility Calculate the volatility of a portfolio of 50 percent Roten and 50 percent Bradley

Jun 17 2020 View more View Less

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