Seminar 28

which of the following is correct

The expected return for a portfolio borrowing without
is
should never be less than the expected return of the asset
with the lowest expected return
should never be more than the expected return of the asset
with the highest expected return
may not be an event with even a positive probability of
occurance

501540
501560 winning
in a game of chance the probability of
the probability of losing
what is the expected value of a prize in the game
number of assets inportfolio
n
E R asset
expected i pie'gptffithasset
return expected return of ith asset
150 0.40 150 0.60 10

use the
the
following
asset
table to calculate the expected return
for
return probability
0.10 0.25
0.20 0.50

0.25 0.25
what is the expected return of the asset

10.10 0.25 10.20 0.50 10.25 0.25

18.75
the expected returnfortheasset below is 18.75 If the
return distribution for the asset is described as in the following
table what is the variance for the asset's return

var Rl of 1 ftp.bilitpgfitygpjhagexpectedreturn
 01
why do we square it
10.25 0.10 0.18754 10.50 10.20 0.18759
10.2510 25 0.187512
0.002969
the expected return for share 21530 i If we know the
in the lukewarm state
follo ing
information about share 2 then what return will it produce
of the world
rearrange r p
expected return
formula poor 0.20 0.25
lukew 0.50

dynam 0.40 0.25

number of assets inportfolio
n
E R asset
expected y pie'gptffithasset
return expected return of ith asset

fill numbers into

10.25 0.20 0.50 0.40 0.25 formulas
0.30 expected return
10.25 0.20 0.40 0.25 expected return w o
0.15 minus value from total unknown figure
0.15 0.50 divide value from 0.15 to find value of001
0.30
Ahmet purchased a share for 145 one year ago The share is now
65 During the year the share paid a dividend of 2.50 What is
the total return to Ahmet from owning the share
Ri Rea Ri P P CFI
É Po
po
Po to make it
total
p Pg Dividend 654g 2 go aggentage
Oramant Po
501
C needs to capture a return of 401 for his one year investment
in a property He thinks he can sell it at the end of the year
for 1150,000 and that the property will provide him with rental
income of 125,000 What is the maximum amount that G should
be willing to pay for property

holdingperiod return
total
Dividend 150,000 beginningamount
amoth'g 25,000 100 40
amah't dividend
rearrangetofind
125,000

If we were to compare the returns of an individual share

to a market index select the index below that is most true
a the returns of the individual share will show more variability
than those of the market index

E has made an investment that will generate returns that are

subject to the state of the economy use the following info to calculate
the standard deviation of the return distribution for E's investment
state

weak go 0.8
Ok 0.17 0.1

great 0.28 0.1

which of the following is the standard deviation of the investment

var Rl of 1 ftp.bilitpgfitygpjhagexpectedreturn

O
squareroot variance first'natneer
then input intoVAR
O

jIi
togetstandarddeviation

n
pqe.jp
number of assets inportfolio 4 for answer
E Raggett
expected
return expected return of ith asset
ER 10.10 0.80 10.17 0.10 10.28 0.10
AR 10.80 10.10 0.1254 10 1010.17 0.12514
10.1010 28 0.12514
answer
SD 0.0557