FIN2&D1 t t t t
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ASSIGNMENT
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1 SEMESTER
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1
--------f(ttt QUES--IONS FltlttYr-ANSWERED
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DUE: 16 APRIL 2D26 +
DISCLAIMER: I I
THI$ DOCUMEN IS FDR REFERENCE AND GUIDftN E PURP SES _________.___
DNl.;Y. I DD NOT TAKE RESPpNSIBIUITY )FDR AN~ PLAGIARl~M. ~MISUS • DR
ACADEMIC MISCONDUCT RESULTING FROM THEIR USE. IT 15 YDURi j ---
RESPDNSIBILITf T ENSU E DRIGINA~TY ANQ CDMPl!IAN E WITH
RELEVA T GUIDELINES DR STANDARD .
, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
Question 1
1. Read the information provided and then answer the questions that follow. Indicate all the
steps in your calculations.
1.1. Calculate the expected return of the market portfolio using the probability distribution
provided.
Calculate the expected return of the market portfolio using the provided probability distribution. The
formula for expected return (E(R)) is:
n
E (R ) = ~ P, • R;
i -1
Where:
Pi is the probability of the i-th outcome.
Ri is the return corresponding to the i-th outcome.
Given:
Probability (0.1) → Market Return (10%)
Probability (0.2) → Market Return (12%)
Probability (0.4) → Market Return (13%)
Probability (0.2) → Market Return (16%)
Probability (0.1) → Market Return (17%)
Compute the expected return:
E(R)=(0.1⋅ 10%)+(0.2⋅ 12%)+(0.4⋅ 13%)+(0.2⋅ 16%)+(0.1⋅ 17%)
The expected return of the market portfolio is 13.5%.
• ►
ASSIGNMENT
-t
►- f f
1 SEMESTER
f r r r r
1
--------f(ttt QUES--IONS FltlttYr-ANSWERED
t t i t
DUE: 16 APRIL 2D26 +
DISCLAIMER: I I
THI$ DOCUMEN IS FDR REFERENCE AND GUIDftN E PURP SES _________.___
DNl.;Y. I DD NOT TAKE RESPpNSIBIUITY )FDR AN~ PLAGIARl~M. ~MISUS • DR
ACADEMIC MISCONDUCT RESULTING FROM THEIR USE. IT 15 YDURi j ---
RESPDNSIBILITf T ENSU E DRIGINA~TY ANQ CDMPl!IAN E WITH
RELEVA T GUIDELINES DR STANDARD .
, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
Question 1
1. Read the information provided and then answer the questions that follow. Indicate all the
steps in your calculations.
1.1. Calculate the expected return of the market portfolio using the probability distribution
provided.
Calculate the expected return of the market portfolio using the provided probability distribution. The
formula for expected return (E(R)) is:
n
E (R ) = ~ P, • R;
i -1
Where:
Pi is the probability of the i-th outcome.
Ri is the return corresponding to the i-th outcome.
Given:
Probability (0.1) → Market Return (10%)
Probability (0.2) → Market Return (12%)
Probability (0.4) → Market Return (13%)
Probability (0.2) → Market Return (16%)
Probability (0.1) → Market Return (17%)
Compute the expected return:
E(R)=(0.1⋅ 10%)+(0.2⋅ 12%)+(0.4⋅ 13%)+(0.2⋅ 16%)+(0.1⋅ 17%)
The expected return of the market portfolio is 13.5%.
