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Suppose that you are deciding between two different investments for the coming year. The first investment is a mutual fund that consists of the stocks that comprise the Dow Jones Industrial Average. The second investment is a mutual fund that is expected to perform best when the economy in wouk Lot X be the variable that corresponds to the Dow Jones bund and Y be the variable that coresponds to the weak-economy fund The expected values and the variances for each variable and the covariance are calculated and the results are shown below. EX)-5175, E(Y) $55,02 68,125, 02-28 225. oxy = - 33,625 When hall of the portfolio annets are invested in the Dow Jones fund and halt in a weak-economy fund, the portfolio expected return is found to be 5115 and the portfolio risk is found to be 585 29 Complete parts (a) through (c) below m Click the icon to view the table that summarizes the estimate of returns a. Recalculate the pottolo expected return and the portfolio risk 30% of the portfolio assets are invested in the Dow Jones fund and 70% in a weak economy fund. The portfolio expected retum is EP)-5 (Type an integer or a decimal. Do not round) assets are invested in the Dow Jones fund and half in a weak economy fund the portfolio expected return is found to be $115 and the $85.29. the tablet 0 Summary of Investment Returns - nd 70% in a weak-economy fund o expected turn is E(P) cimal. Do no The table summarizes the estimate of the returns per $1,000 investment under three economic conditions Investment P(XY) Economic Condition Dow Jones Fund Weak. Economy Fund 02 Recession $300 +$200 0.5 Stable economy +200 + 150 0.3 Expanding economy +450 - 200 the answer bo Print Done Check AS Copyright o ZU2T Pearson Education Inc. All rights reserved. Terms of Use Privacy Policy Terms OST Tontactos

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