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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