Calculate the expected return of these two stocks

Assignment Help Financial Management

Reference no: EM131996046

Overall economic condition affect return of common stocks. suppose a financial analyst believes that four states of the national economy are possible and each state has an equal probability of occurrence. The estimate returns of two stocks GM and IBM under these four states of economy are presented in the following table.

state of economy. return of gm. return of ibm

negative real growth. -11% -3%

zero economic growth. 4. 17

modest real growth. 9. 21

high economic growth. 28. 23

1. calculate the expected return of these two stocks.

2. calculate the standard deviation of return of these two stocks.

3. calculate the correlation off gm and IBM

4. determine the expected return and standard deviation of return of the following portfolio: 70% invested in gm and 30% in ibm.

Reference no: EM131996046

Questions Cloud

Calculate the sharpe ration of each mutual fund : calculate the Sharpe ration of each mutual fund. which mutual fund should you choose? explain.

Flaws with theory that life came from organic compounds : According to the Bible, life started when God spoke it into existence. Are there any flaws with the theory that life came from organic compounds?

Make the employee indifferent between the two options : What is the amount that would make the employee indifferent between the two options?

What is the symbol of a period 3 element that forms : Write the symbol of an ion from group 7A with 10 electrons. What is the symbol of a cation from group 2A with 54 electrons.

Calculate the expected return of these two stocks : calculate the expected return of these two stocks. calculate the standard deviation of return of these two stocks.

Largest contribution to the true structure : Draw resonance structures for each the following compounds or ions and use formal charges to indicate which resonance structure will make the largest

Describe the proper procedures and policies : Describe the proper procedures and policies that would be implemented specific to the DR team personnel as well as special equipment that would be required.

What is the future value at the end of year three : What is the future value at the end of year 3 of the following set of cash flows if the interest rate is 14%?

Write a discussion post in response : Minimum 300 words. Choose one of the 11 discussion questions located at the end of Chapter 3, CPM 4e and write a discussion post in response.

User Account

All Pages