XYZ ltd. is considering three possible capital projects for next year. Each project has a 1 year life, and project retur

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answerhappygod
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XYZ ltd. is considering three possible capital projects for next year. Each project has a 1 year life, and project retur

Post by answerhappygod »

XYZ ltd. is considering three possible capital projects for next
year. Each project has a 1 year life, and project returns depend on
next years state of the economy. The estimated rates of return are
shown below.
STATE OF THE

PROBABILITY

RATE OF RETURN
ECONOMY

OF OCCURRENCE
A
B
C
Recession

0.25


10% 9%
14%
Average


0.50

14
13
12
BOOM


0.25

16
18
10
REQUIRED: Compute the standard deviation of the portfolio
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