# Finance

**Paper, Order, or Assignment Requirements**

7-An analyst estimates that a risky portfolio has the following probabilities of return depending on the state of the economy:

State of Economy Probabilities Return

Boom 0.40 15%

Normal 0.50 13%

Recession 0.10 7%

- What is expected return of the portfolio?

- What is the standard deviation of the portfolio?

- Give the expected return and standard deviation you calculated in part (a)and (b)

- Please provide an interpretation of your calculated 5% VaR in part

(c).

9-Suppose you purchased ABC stock 4 years ago and your purchasing price was $40. The ABC stock price went up and down in the past 4 years in the following sequence :$50, $38, $28 and $49. Assume no dividend is equal and risk free rate 1%.

- Calculate holding period returns for year 1,2,3,and 4 respectively.
- Suppose we have no probability profile about future scenarios. Calculate the expected rate of return of holding ABC stock for the next year.
- Please calculate the standard deviation of ABC stock (please provide either calculation process via formula or calculator input process)
- Please calculate downside risk of ABC stock (please provide either calculation process via formula or calculator input process)
- What is the sharp ratio for ABC stock?

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