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- September 13, 2020
- By menge

I have done the question and i have the answer but the teacher told me the answer is wrong. Please someone confirm to me where is the mistakes and make changes to it

ABLA DEHAI AL MEQBALI

Step 1 Providing details for Available Probability and return on each stock with each scenario respectiv

Return on respective stocks

A

B

17%

8%

-3% Probability

Boom

10%

Normal

30%

Recession

60% 6%

10%

19% Step 2 In this stage we identify the amount of money invested in each stock

Stock A

$

30,000

Stock B

$

20,000

Stock

$

40,000

Total Investment

$

90,000 Step 3 Calculating Expected Values, Deviation from expected value and Square of deviation Expected Return – Boom

Expected Return – Normal

Expected Return – Recession Step 4 $

30,000 $

20,000

Expected value

Probability

$

15,100.00

10%

$

28,400.10

30%

$

9,100.19

60% Calculating Expected Return of Portfolio, variance and Standard Deviations

Expected Return on Portpolio

Variance of the portpolio $

$ Standard deviation of the portfoli $ 15,490.14

74,514,218 8,632 Please note all the calculation formulaes are done unde EQBALI ck with each scenario respectively C

22%

15%

-25% $

40,000

Deviation from expected va Square of deviation

$

(390.14) 152212.34074

$

12,909.96 166666963.92

$

(6,389.95) 40831512.122 ulaes are done under the values