3. Suppose you have some money to invest—for simplicity, $1—and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that $1 invested in a stock fund yields Rs after 1 year and that $1 invested in a bond fund yields Rb, suppose that Rs is random with mean 0.08 (8%) and standard deviation 0.07, and suppose that Rb is random with mean 0.05 (5%) and standard deviation 0.04. The correlation between Rs and Rb is 0.25. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R = wRs + (1 − w)Rb.
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Business, 22.06.2019 07:30, alexanderavrett
Awell-written business plan can improve your chances of getting funding and give you more free time. improved logistics. greater negotiating power.
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Business, 22.06.2019 09:50, niele123
The returns on the common stock of maynard cosmetic specialties are quite cyclical. in a boom economy, the stock is expected to return 22 percent in comparison to 9 percent in a normal economy and a negative 14 percent in a recessionary period. the probability of a recession is 35 percent while the probability of a boom is 10 percent. what is the standard deviation of the returns on this stock?
Answers: 2
3. Suppose you have some money to invest—for simplicity, $1—and you are planning to put a fraction w...
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