5.12 You are trying to develop a strategy for … investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic

5.12 You are trying to develop a strategy for … investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the following probability distribution: Returns Probability Economic Condition Stock X Stock Y 0.1 Recession -100 50 0.3 Slow growth 0 150 0.3 Moderate growth 80 -20 0.3 Fast growth 150 100 Compute the a. expected return for stock X and for stock Y. b. standard deviation for stock X and for stock Y. c. covariance of stock X and stock Y. d. Would you invest in stock X or stock Y? Explain. Question 5.13 Suppose that in Problem 5.12 you wanted to create a portfolio that consists of stock X and stock Y. Compute the portfolio expected return and portfolio risk for each of the following percentages invested in stock X: a.30% b.50% c.70% d. On the basis of the results of (a) through (c), which portfolio would you recommend? Explain

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadline.


Click Here to Make an Order Click Here to Hire a Writer