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I need a 250 word reply to each of the following two forum post (500 words total):

 

Forum #1

 

Complete Problems 1, 2, and 3 from the Questions and Problems section of Chapter 11 (shown below). Remember to complete all parts of the questions, and report the results of your analysis.  Respond to at least two of your classmates’ posts outside of your own thread.

a. Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone.

State of Economy

Probability of State of the Economy

Security Return if State Occurs

Recession

.30

-8%

Normal

.40

13

Boom

.30

23


Using the information in the previous question, calculate the standard deviation of returns.
Repeat Questions 1 & 2 assuming that all three states are equally likely.

 

Forum #2

 

Complete Problem 10 from the Questions and Problems section of Chapter 12: A stock has a beta of .9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent.

 

a. What is the expected return on a portfolio that is equally invested in the two assets?
b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights?
c. If a portfolio of the two assets has an expected return of 8 percent, what is its beta?
d. If a portfolio of the two assets has a beta of 1.80, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

Remember to complete all parts of the questions, and report the results of your analysis. 

 

 

 

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