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Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers?
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Event Boom Recession Stagnation Depression Question 42 Probability 20 ...
Calculating Expected Return and Risk
- Expected Return:
To calculate the expected return of the portfolio, we use the formula:
Expected Return = (Weight of Security X * Expected Return of Security X) + (Weight of Security Y * Expected Return of Security Y)
Expected Return = (0.60 * 20) + (0.40 * 10) = 12 + 4 = 16
- Risk (Standard Deviation):
To calculate the risk of the portfolio (standard deviation), we use the formula:
Variance of the Portfolio = (Weight of Security X)^2 * Variance of Security X + (Weight of Security Y)^2 * Variance of Security Y + 2 * Weight of Security X * Weight of Security Y * Covariance of Security X and Security Y
Standard Deviation of the Portfolio = Square Root of Variance of the Portfolio
- Background Materials Financial Management:
Financial management involves the planning, organizing, directing, and controlling of financial activities within an organization. It includes tasks such as budgeting, forecasting, cash flow management, investment analysis, and risk management. Financial managers play a crucial role in ensuring the financial health and success of a company by making strategic financial decisions.
Overall, by calculating the expected return and risk of the portfolio, financial managers can assess the potential profitability and volatility of their investments. This information is essential for making informed decisions to maximize returns while managing risks effectively.
- Expected Return:
To calculate the expected return of the portfolio, we use the formula:
Expected Return = (Weight of Security X * Expected Return of Security X) + (Weight of Security Y * Expected Return of Security Y)
Expected Return = (0.60 * 20) + (0.40 * 10) = 12 + 4 = 16
- Risk (Standard Deviation):
To calculate the risk of the portfolio (standard deviation), we use the formula:
Variance of the Portfolio = (Weight of Security X)^2 * Variance of Security X + (Weight of Security Y)^2 * Variance of Security Y + 2 * Weight of Security X * Weight of Security Y * Covariance of Security X and Security Y
Standard Deviation of the Portfolio = Square Root of Variance of the Portfolio
- Background Materials Financial Management:
Financial management involves the planning, organizing, directing, and controlling of financial activities within an organization. It includes tasks such as budgeting, forecasting, cash flow management, investment analysis, and risk management. Financial managers play a crucial role in ensuring the financial health and success of a company by making strategic financial decisions.
Overall, by calculating the expected return and risk of the portfolio, financial managers can assess the potential profitability and volatility of their investments. This information is essential for making informed decisions to maximize returns while managing risks effectively.
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Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers?
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Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers?.
Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Event Boom Recession Stagnation Depression Question 42 Probability 20 40 30 10 Calculate the expected Return and Risk (standard deviation of the portfolio if the tund has invested 60% money is secunty X and 40% in secunty Y Fleturita on Secunt() X 10 25 20 10 Y 10 25 20 10 H 20 45 125 21 16 Background Materials Financial Managemers?.
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