Risk-Return in a Portfolio Question

question 20

Essay

Risk-Return in a Portfolio Question:
The following table presents some statistics about the returns of three assets, Assets A, B, and C, respectively, under three possible scenarios (Boom, Normal, and Recession).The expected probabilities of each state are also specified in the table.
a)Complete the blanks in the above table.Show your calculations.
b)Suppose you wish to combine Assets A and B in order to create a portfolio that has the same total risk as Asset C.What weight should you invest in Asset A? In Asset B?

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Definitions:

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Describing behavior that is playfully mischievous or dishonest, often in a benign or amusing way.

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Small mammals with long ears, characterized by their fast reproduction and commonly found in several parts of the world.

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A declaration that signifies an opinion or judgment.

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Statements that cannot both be true at the same time, though they can both be false.