1. Calculate the Expected Rate, Standard Deviation, Variance and Coefficient of variation and decide which of the follow
Posted: Tue Jan 18, 2022 12:58 pm
1. Calculate the Expected Rate, Standard Deviation, Variance and
Coefficient of variation and decide which of the following company
is better for investment.
Possible outcomes
Probability
Rate of Return
Company G
Company H
Bullish Trend
0.25
20%
32%
Normal Trend
0.45
8%
5%
Bearish Trend
0.3
-6%
-6%
2. Consider a portfolio comprised of three securities in the
following proportions and with the indicated security beta.
Security
Amount Invested
Beta
Expected return
A
$1.5 million
1.3
12.5%
B
$1.0 million
-0.1
8%
C
$2.0 million
0.6
9.8%
a. What is the portfolio’s beta?
b. What is the portfolio’s expected return?
Coefficient of variation and decide which of the following company
is better for investment.
Possible outcomes
Probability
Rate of Return
Company G
Company H
Bullish Trend
0.25
20%
32%
Normal Trend
0.45
8%
5%
Bearish Trend
0.3
-6%
-6%
2. Consider a portfolio comprised of three securities in the
following proportions and with the indicated security beta.
Security
Amount Invested
Beta
Expected return
A
$1.5 million
1.3
12.5%
B
$1.0 million
-0.1
8%
C
$2.0 million
0.6
9.8%
a. What is the portfolio’s beta?
b. What is the portfolio’s expected return?