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What is the variance of returns for Security ABC?
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- Given the following probability distribution, what is the expected return and the standard deviation of returns for Security J? The answer choice lists expected return and standard deviation in the respective order. State 1 2 3 Pri 0.2 O 12%; 5.18% O 15%; 3.16% O 15%; 6.50% 0.6 0.2 O 20%; 5.00% 15%; 10.00% rj 10% 15 20Given the following probability distribution of returns: Probability Return 0.1 -15.0% 0.25 0.0% 0.3 8.5% 0.25 12.0% 0.1 32.0% what is the expected return?Given the following probability distribution, what are the expected return and the standard deviation of returns for Security J? State Pi ri 1 0.5 11% 2 0.3 8% 3 0.2 5% O 9.40%; 2.04% O 8.90%; 2.34% O 7.40%; 2.94% O 8.40%; 2.64% O 7.90%; 1.74%
- Based on the following probability distribution, what is the security’s expected return? State Probability r 1 0.2 –5.0% 2 0.4 10.0 3 0.4 30.0Based on the following probability distribution, what is the security's expected Expected Return 11-1 return? Probability State -5.0% 0.2 0.3 10.0 3 30.0 0.5Complete the table below using CAPM model Case Expected return RF RM Beta A ? % 10% 18% 0.8
- Two sets of security X and Y have the following characteristics. Security X Probability Return Securty Y Probability Return 0.1 30% 0.5 -20% 0.2 20% 0.25 10% 0.4 10% 0.30 20% 0.2 05% 0.30 30% 0.1 -10% 0.10 40% Required. Calculate the expected return for each Security. Calculate the standard deviation for each security.Security A has the following probability distribution of returns:Scenario Probability Return 1 0.1 15% 2 0.8 25% 3 0.1 35%What is the variance for Security A?Expected Return 11-1 Based on the following probability distribution, what is the security's expecteċ return? State Probability r 1 0.2 -5.0% 0.3 10.0 3 0.5 30.0
- EXAMPLE• Consider the following information:State Probability ABC, Inc. ReturnBoom .25 0.15Normal .50 0.08Slowdown .15 0.04Recession .10 -0.03• What is the expected return?• What is the variance?• What is the standard deviation?Given the following probability distributions, what are the expected returns for the Market and for Security J? Statei Pr i rM rJ 1 0.3 −10% 40% 2 0.4 10 −20 3 0.3 30 30Example 3 Inns oont alafrA Following Example 2, consider a porfolio with three assets S1, S2 and S3 which have expected rates of return 0.1,0.15 and 0.2 respectively, and variance-covariance matrix odni tanoma bszt a aitevi ot botoly 0.1 0.1 -0.1 0.1 0.2 0.1 ololles V = -0.1 0.1 0.6 vo ) isaas sod slais a at gaiteoo ottg ndi oda vodT (aldanoitesup als ot-lais wod ibuadala abnod on a) What is the optimal portfolio when up = worod of sidad = 0.2. adt yhalinie ini ba moe ja SOLUTION lo ano ot b) Use this piece of information and the earlier optimal portfolios from la aao e. Example 2 to find the quadratic equation relating of and up. ni bstni sd SOLUTION tar oad o bo s e) Hence draw a plot of the solutions, and identify the frontier port- Ldon to slar folios. it SOLUTION ods Btvni gatela dt