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C11 P7 9 11 Excel Spreadsheet

C11 P7 9 11 Excel Spreadsheet - State Probability Return...

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Problem 7 State Probability Return Δ 2 Weighted  Δ 2 Std. Dev. Return Stock A Recession 0.20 1.00% 0.20% 0.01 0 -25.00% -5.00% Normal 0.55 9.00% 4.95% 0 0 15.00% 8.25% Boom 0.25 14.00% 3.50% 0 0 38.00% 9.50% 8.65% 0 4.35% 12.75% Weighted  Return Weighted  Return Variance Expected Return Expected Return
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Δ 2 Weighted  Δ 2 Std. Dev. Stock B 0.14 0.03 0 0 0.06 0.02 0.04 21.15% Variance
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Problem 9a State Probability Return A Weighted A Return B Weighted B Return C Weighted C Boom 0.65 8.00% 2.67% 2.00% 0.67% 23.00% 7.67% 11.00% Bust 0.35 12.00% 4.00% 18.00% 6.00% -3.00% -1.00% 9.00% Portfolio Weight 0.33 0.33 0.33 Portfolio  Return
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7.15% 3.15% 10.30% Weighted  Portfolio  Return Expected Portfolio Return
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Problem 9b State Probability
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