Compute the expectation and variance of the return

Assignment Help Financial Management

Reference no: EM131909550

Two investments have the following returns for the two events indicated:

event	Pobability	value of	investment
		D	F
e ₁	0.6	$600	-$100
e ₂	0.4	-$400	$500

a. Compute the expectation and variance of the return of each investment and their co-variance od the two investments.

b. Compute the correlation coefficient of the returns of the two investments.

c. What is the expected value and variance of the total return of the investment in both Dand F?

Reference no: EM131909550

Questions Cloud

Stocks and their valuation-discounted dividend model : We will now look at 3 different situations where we can adapt this generalized model to each of these situations to determine stock's intrinsic value.

Different areas of the human body : The microbial communities in different areas of the human body are more different than those in a coral reef and a prairie. Ecologists

Find the present value of asset d : Using the information provided in the table, find the value of each asset.Find the present value of Asset D.

Does the culture of firm get reflected in appetite for risk : Does the culture of a firm get reflected in its appetite for risk or vice versa? Is there an audit plan to account for culture; is culture a control.

Compute the expectation and variance of the return : Compute the expectation and variance of the return of each investment and their co-variance od the two investments.

How much should he pay today for the annual membership : If the appropriate interest rate is 12%, how much should he pay today for the annual membership?

What is the price-earnings ratio : The profit margin is 3.8 percent. There are 32,500 shares of stock outstanding. The market price per share is $21.60. What is the price-earnings ratio?

What is the evidence for and the presumed effects : What is the evidence for and the presumed effects of climate change in a grassland ecosystem?

What is company total market value of debt : What is the company’s total market value of debt? What is the company’s total book value of debt?

User Account

All Pages