FIN2601 Assignment 2 Semester 1 & 2 2021

FIN2601 Assignment 2 Semester 1 &
2 2021

, FIN2601
ASSIGNMENT 2 SEMESTER 1 & 2 2021
UNIQUE NUMBER:829061
DISCL A IM ER: Extreme care has been used to create this document, however the contents are provided “as is” without any
represent ations or warranties, express or implied. This document is to be used for comparis on, research and reference
purpos es ONLY. Directly submitting and/or reselling/ distribution / reproduction any part of this document is not permitted.

PREVIEW OF QUESTION 1
1. 2 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 = ∑(𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑡𝑦 ∗ 𝑟𝑒𝑡𝑢𝑟𝑛)

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛(𝑈𝑟𝑏𝑎𝑛 𝐹𝑜𝑜𝑑𝑖𝑒) = 0.20 ∗ −15% + 0.50 ∗ 20% + 0.30 ∗ 60% = 0.25

𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛(𝑊𝑖𝑐𝑘𝑒𝑑 𝐶ℎ𝑒𝑓) = 0.20 ∗ 20% + 0.50 ∗ 30% + 0.30 ∗ 40% = 0.31


𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑓 𝑎 𝑝𝑜𝑟𝑡𝑓𝑜𝑙𝑖𝑜 = 0.75 ∗ 0.25 + 0.25 ∗ 0.31 = 0.265 = 26.50%