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kirill115 [55]
3 years ago
15

Kathleen has two investment opportunities. She can invest in The Sunglasses Company or the Umbrella Company. She estimates there

is a 75% chance it will remain sunny and Sunglasses Co. stock will rise 50% and Umbrella Co. stock will stay flat. She also estimates there is a 25% chance it will rain and Sunglasses Co. stock will remain flat and Umbrella Co. stock will rise by 25%. If she diversifies her investment by putting 50% of her money in each company, what is the expected return and standard deviation of her portfolio

Business
2 answers:
WARRIOR [948]3 years ago
7 0

Answer: 21.88%

Explanation: see attachment below

zubka84 [21]3 years ago
5 0

Answer:

Explanation:

Attachment below

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The present value of the investment future value is $38,628.40

What is present value?

Present value is the today's worth of a future amount when discounted or expressed in today's dollar equivalence.

The present value of a single future cash flow can be determined using the present value formula below:

PV=FV/(1+r/365)^(N*365)

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FV=future value=$95,000

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365 is an indication of number of years in a year since discounted is compounded daily.

PV=$95,000/(1+9%/365)^(10*365)

PV=$38,628.40

The present value can be further understood using the link below:

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