Instruction 5 -Referring to Instruction 5

question 12

Short Answer

Instruction 5.3
There are two houses with almost identical characteristics available for investment in two different neighbourhoods with drastically different demographic composition. The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
$$\begin{array} { | c | c | c | } \hline \text { Probability } & \text { Neighbourhood A } & \text { Neighbourhood B } \\\hline 0.25 & - \$ 22,500 & \$ 30,500 \\\hline 0.40 & \$ 10,000 & \$ 25,000 \\\hline 0.35 & \$ 40,500 & \$ 10,500 \\\hline\end{array}$$
-Referring to Instruction 5.3,if you can invest 70% of your money on the house in neighbourhood A and the remaining on the house in neighbourhood B,what is the portfolio risk of your investment?

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Mean

A numerical metric that denotes the central value of a numerical array, determined by summing all the elements in the array and then dividing by the count of those elements.

Internal Reliability

A measure of consistency among multiple items or parts of a test or measurement tool.

Questionnaire

A set of written questions used for collecting information from respondents.