Chapter 11-13 Assignments

Chapter 11-13 - FIN 355 Homework Chapter 11(P401-403 Questions and Problems 13 8 9 1113 Chapter 12(P436-438 Questions and 20 Chapter 13(P464-465

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 355 Homework Chapter 11 (P401-403): Questions and Problems 1–3, 8, 9, 11–13 Chapter 12 (P436-438): Questions and Problems 1–9, 12, 20 Chapter 13 (P464-465): Concept Questions: 1–4, 6, 7 Questions and Problems 3, 10–12
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1 Chapter 11 Diversification and Risk Allocation 1. E[R] = .3(–.08) + .4(.13) + .3(.23) = 9.70% 2. σ 2 = .3(–.08 – .0970) 2 + .4(.13 – .0970) 2 + .3(.23 – .0970) 2 = .015141; σ = (.015141) 1/2 = .1230 = 12.30% 3. E[R] = (1/3)(–.08) + (1/3)(.13) + (1/3)(.23) = 9.33% σ 2 = (1/3)(–.08 – .0933) 2 + (1/3)(.13 – .0933) 2 + (1/3)(.23 – .0933) 2 = .01669; σ = (.01669) 1/2 = .1292 = 12.92% 8. E[R A ] = .25(.04) + .55(.09) + .20(.12) = 8.35% E[R B ] = .25(–.20) + .55(.13) + .20(.33) = 8.75% A 2 =.25(.04 – .0835) 2 + .55(.09 – .0835) 2 + .20(.12 – .0835) 2 = .000763; A = [.000763] 1/2 = .0276 B 2 =.25(–.20 – .0875) 2 + .55(.13 – .0875) 2 + .20(.33 – .0875) 2 = .033419; B = [.033419] 1/2 = .1828 9. a. boom: R p = .25(.18) + .50(.48) + .25(.33) = .3675 good: R p = .25(.11) + .50(.18) + .25(.15) = .1550 poor: R p = .25(.05) + .50(–.09) + .25(–.05) = –.0450 bust: R p = .25(–.03) + .50(–.32) + .25(–.09) = –.1900 E[R p ] = .10(.3675) + .30(.1550) + .40(–.0450) + .20(–.1900) = .02725 b. p 2 = .10(.3675 – .02725) 2 + .30(.1550 – .02725) 2 + .40(–.0450 – .02725) 2 + .20(–.1900 – .02725) 2 = .02800; p = [.02800] 1/2 = .1673 11. Boom: R p = .35(15%) + .45(18%) + .20(20%) = 17.35% Bust: R p = .35(10%) + .45(0%) + .20(–10%) = 1.50%
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/18/2011 for the course FIN 355 taught by Professor Phsiao during the Fall '08 term at S.F. State.

Page1 / 6

Chapter 11-13 - FIN 355 Homework Chapter 11(P401-403 Questions and Problems 13 8 9 1113 Chapter 12(P436-438 Questions and 20 Chapter 13(P464-465

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online