QUESTION
The following information relates to Netherton’s investment performance, during various economic conditions.
Required:
a) Calculate the expected return of this investment. (8)
b)Estimate the overall risk (standard deviation) of this investment. (7)
Solution
Economic conditions | Probability | Expected return | Formula =Σ𝑬(𝑹𝑹) | Σ𝑬(𝑹𝑹) |
Boom | 0.20 | +40% | (0.20×40) |
8+ |
Normal | 0.60 | +15% | (0.60×15) |
9+ |
Recession | 0.20 | -10% | [0.20x(-10)] |
-2 |
Expected Return = |
15 |
Investment Standard Deviation
thank you
please send me an another example
Regards
Jayarani
You are welcome.
Okay
https://blog.therongroup.org/correlation-coefficient/
https://blog.therongroup.org/expected-return-the-variance-and-standard-deviation/
JAYARANI MOODLEY
Kindly follow the links for more examples of portfolio theory.