Expected return and standard deviation of the firm

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Reference no: EM131332789

1) Suppose your sensitivity analysis indicates the following return outcomes and probabilities for a project you are considering and the firm without the project:

Project Probability Firm

.0145 .025 .0435

.0325 .05 .0635

.0515 .125 .1225

.0835 .3 .0985

.1015 .3 .0815

.1245 .125 .1075

.1475 .05 .1135

.1584 .025 .1035

Calculate:

1) The expected return and standard deviation of the project.

2) The expected return and standard deviation of the firm without the project.

3) The expected return and standard deviation of the firm with the project added if the project represents 28% of total assets and the firm without the project represents 72% of total assets.

4) The co-variance of project and firm returns

5) The correlation coefficient of project and firm returns.

Reference no: EM131332789

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