Instruction 5 -Referring to Instruction 5

question 147

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 90% 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:

Graphical Techniques

Methods used in data analysis that involve the visual representation of data to identify patterns, trends, and relationships.

Standard Deviation

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

Histograms

Graphical representations of the distribution of numerical data, where the data is grouped into bins or intervals.

Graphical Techniques

The use of plots, charts, and graphs to visualize, interpret, and analyze data.