Solution Library

Finding Expected Mean, Variances and Standard Deviation

Question

Consider the following ex ante (expected) distributions for assets 1 and 2: marginal distributions

Asset 1

 

 

Asset 2

 

 

m

R1m

f(R1m)

l

            R2l

f(R2l)

1

12%

0.45

1

4%

0.09

2         

6%

0.55

2

8%

0.17

 

 

 

3         

10%

0.35

 

 

 

4         

14%

0.39

joint distribution (for above outcomes of return)

m

L

f(R1m, R2l)

1                                 

1

0.01

1                                 

2

0.03

1

3

0.17

1

4

0.24

2                                 

1

0.08

2                                 

2

0.14

2                     

3

0.18

2

4

0.15

Question

Using the ex ante data given on the preceding page, calculate the following:

A. The expected (mean) returns (E[Ri]) for assets 1 and 2

B. The variances (total risk) of return (si2) for assets 1 and 2

C. The standard deviations (total risk) of return (si) for assets 1 and 2

D. The covariance of return (sij) between assets 1 and 2

E. The correlation coefficient of return (rij) between assets 1 and 2

 

Summary

The question belongs to Statistics and it is about finding expected mean, variances, standard deviation and correlation coefficient between two assets and their returns.

Total Word Count 152

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.