Returns on Alternative Investments

Estimated Rate of Return

High Tech Collectio U.S. Market 2-Stock

State of the Economy Prob. T-Bills ns Rubber Portofolio Portofolio
Recession 0.1 5.5% -27.0% 27.0% 6.0% -17.0% 0.0%
Below Avg. 0.2 5.5% -7.0% 13.0% -14.0% -3.0% 3.0%
Average 0.4 5.5% 15.0% 0.0% 3.0% 10.0% 7.5%
Above Avg. 0.2 5.5% 30.0% -11.0% 41.0% 25.0% 9.5%
Boom 0.1 5.5% 45.0% -21.0% 26.0% 38.0% 12.0%
r-hat 5.5% 12.4% 1.0% 9.8% 10.5%
Std. dev. (s) 0.0% 20.0% 13.2% 18.8% 15.2% 3.4%
Coeff. of Var. (CV) 0.0% 1.6% 13.2% 1.9% 1.4% 0.5%
beta (b) 0.00 1.32 -0.87 0.88 1.00

r-hat high tech 0,1(-27,0%)+0,2(-7,0%)+0,4(15,0%)+0,2(30,0%)+0,1(45,0%) 12.4%

use the same formula to calculate r-hat for the other alternatives
r-hat T-bills 0,1(5,5%)+0,2(5,5%)+0,4(5,5%)+0,2(5,5%)+0,1(5,5%) 5.5%
r-hat collections 0,1(27,0%)+0,2(13,0%)+0,4(0,0%)+0,2(-11,0%)+0,1(-21,0%) 1.0%
r-hat u.s. rubber 0,1(6,0%)+0,2(-14,0%)+0,4(3,0%)+0,2(41,0%)+0,1(26,0%) 9.8%
r-hat market 0,1(-17,0%)+0,2(-3,0%)+0,4(10,0%)+0,2(25,0%)+0,1(38,0%) 10.5%

[((-27,0-12,4)^2)(0,1)+((-7,0-12,4)^2)(0,2)+((15,0-12,4)^2)(0,4)+
s high tech 20.1%
((30,0-12,4)^2)(0,2)+((45,0-12,4)^2)(0,1)]^1/2
[((5,5-12,4)^2)(0,1)+((5,5-12,4)^2)(0,2)+((5,5-12,4)^2)(0,4)+((5,5-
s T-bills 2.4%
12,4)^2)(0,2)+((5,5-12,4)^2)(0,1)]^1/3
[((-27,0-12,4)^2)(0,1)+((-7,0-12,4)^2)(0,2)+((15,0-12,4)^2)(0,4)+
s collections 20.1%
((30,0-12,4)^2)(0,2)+((45,0-12,4)^2)(0,1)]^1/4
[((-27,0-12,4)^2)(0,1)+((-7,0-12,4)^2)(0,2)+((15,0-12,4)^2)(0,4)+
s u.s. rubber 20.1%
((30,0-12,4)^2)(0,2)+((45,0-12,4)^2)(0,1)]^1/5
[((-27,0-12,4)^2)(0,1)+((-7,0-12,4)^2)(0,2)+((15,0-12,4)^2)(0,4)+
s market 20.1%
((30,0-12,4)^2)(0,2)+((45,0-12,4)^2)(0,1)]^1/6