Consider the following information for Hope Co.: State Probability...
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Accounting
Consider the following information for Hope Co.:
| State Probability X | Y |
| Boom .35 15% | 10% |
| Normal .50 10% | 8% |
| Recession .15 5% | 10% |
- Compute using 2 different ways the expected return for a portfolio with an investment of $8,000 in asset X and $2,000 in asset Y.
- Based on your previous answer, what is the standard deviation for the same portfolio.
- If the expected inflation rate is 4.5% and the nominal expected return of the previous portfolio is the one computed in question Q1), what are the exact and approximate expected real returns?
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