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Homework answers / question archive / INSTRUCTION: Read the following questions carefully and write your answers clearly to each question
INSTRUCTION: Read the following questions carefully and write your answers clearly to each question. Show all your workings and calculations.
Q1. Consider the following scenario analysis concerning stocks and bonds:
|
STATE OF ECONOMY |
PROBABILITY |
RATE OF RETURN (%) |
|
|
STOCK |
BOND |
||
|
Bad |
0.20 |
--5% |
14% |
|
Normal |
0.60 |
15% |
8% |
|
Good |
0.20 |
25% |
4% |
You are required to calculate for both securities:
a) The expected returns [2 marks]
b) The standard deviations [2 marks]
c) The variance [1 marks]
d) The coefficient of variation [1 marks]
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