What is the expected standard deviation of portfolio returns

Assignment Help Financial Management

Reference no: EM131898169

Wilson holds a two-stock portfolio that invests equally in Kelevra Industries and Old Glory Insurance Company (50% of his portfolio is in each stock). Each stock's expected return for the next year will depend on market conditions. The stocks' expected returns if there are poor, average, or great market conditions are shown below:

State Prob of State Kelevra Old Glory

of economy Economy Industries Insurance

Poor .25 -12% -2%

Average .50 14% 6%

Great .25 42% 14%

What is the portfolio's expected return over the next year?

9.75%

10.75%

11.25%

10%

10.25%

What is the expected standard deviation of portfolio returns?

13.47%

12.38%

11.32%

10.99%

10.65%

Reference no: EM131898169

Questions Cloud

What has been the reason for the high failure rate : What has been the reason for the high failure rate of expatirate managers in Uzbekistan? What can Ludmilla do to increase the success of expats?

Aspects of growing a medical practice : What are two (2) important aspects of growing a medical practice?

The firm faces an average tax rate : What is B2B’s WACC if the firm faces an average tax rate of 30 percent?

Material requirements planning software : You have a demand for 150 units and you're Material Requirements Planning Software shows the following inventory levels for the various components

What is the expected standard deviation of portfolio returns : What is the portfolio's expected return over the next year? What is the expected standard deviation of portfolio returns?

What are the characteristics of a service process : What are the characteristics of a service process? What are the different types of service processes?

What would be oberon before-tax component cost of debt : What would be Oberon’s before-tax component cost of debt? What weight should you use for debt in the computation of OMG’s WACC?

Explain what are the implications for the mnc : What are the implications for the MNC? How do the risk assessments and recommendations for the global organizations compare to domestic organizations?

What are the characteristics of a manufacturing process : What are the characteristics of a manufacturing process? How are manufacturing processes organized and evaluated?

User Account

All Pages