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  3. 1. consider the following returns and states of th

1. Consider the following returns and states of the economy for TZ.Com.: ...

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Question

Finance

1.

Consider the following returns and states of the economy for TZ.Com.:

Economy

Probability

Return

Weak

20%

-10%

Normal

20%

7%

Strong

60%

20%

What is the standard deviation of TZ's returns?

2.

You decide to form a portfolio of the following amounts invested in the following stocks. What is the beta of the portfolio?

SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN INPUT THE NUMBER ROUNDING TO 2 DECIMALS i.e. if your answer is 1.2455, enter it as 1.25 ONLY

Stock

Amount

Beta

Expected Return

Apple

$8,545

 1.56

10.50%

Microsoft

$3,832

 2.46

16.90%

Ford

$5,536

 0.50

15.75%

Time Warner

$4,453

 1.05

11.80%

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