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  • Sun Planet Answer

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    ابو السعود محمد
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    This document contains information about returns and standard deviations for three states (A, B, C) under different probability distributions. It calculates: 1) Expected returns and standard deviations for planets and the sun 2) Returns and standard deviations if returns are a 50% planet/50% sun mix 3) How returns and standard deviations change as the planet/sun probability mix varies from 70%/30% to 10%/90%. 4) The covariance and correlation between states' returns and deviations from the mean return.

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    This document contains information about returns and standard deviations for three states (A, B, C) under different probability distributions. It calculates: 1) Expected returns and standard deviations for planets and the sun 2) Returns and standard deviations if returns are a 50% planet/50% sun mix 3) How returns and standard deviations change as the planet/sun probability mix varies from 70%/30% to 10%/90%. 4) The covariance and correlation between states' returns and deviations from the mean return.

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    © All Rights Reserved
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    11 views2 pages

    Sun Planet Answer

    Uploaded by

    ابو السعود محمد
    This document contains information about returns and standard deviations for three states (A, B, C) under different probability distributions. It calculates: 1) Expected returns and standard deviations for planets and the sun 2) Returns and standard deviations if returns are a 50% planet/50% sun mix 3) How returns and standard deviations change as the planet/sun probability mix varies from 70%/30% to 10%/90%. 4) The covariance and correlation between states' returns and deviations from the mean return.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 2

    State Prob Planet Sun

    A 0.2 25 14
    B 0.45 22 18
    C 0.35 12 20

    Part (a) Expected Return


    Planet 19.1
    Sun 17.9

    Standard Deviation
    State Prob R - Mean P(R-Rm)2 State Prob
    A 0.2 5.9 6.962 A 0.2
    B 0.45 2.9 3.7845 B 0.45
    C 0.35 -7.1 17.6435 C 0.35
    Variance 28.39 Variance
    Standard Deviation 5.328227 Standard Deviation

    Part (b) State Prob Return R - Mean P(R-Rm)2


    Based 50% of each A 0.2 19.5 3.9 1 0.2
    B 0.45 20 9 1.5 1.0125
    C 0.35 16 5.6 -2.5 2.1875
    18.5 3.4

    Standard Deviation 1.843909

    Part (c) 70% Planet & 30% Sun


    Return St Dev Planet & Sun
    0.7 0.3 18.74 3.202249 19.2
    1 0 19.1 5.328227 19
    0.9 0.1 18.98 4.614932
    Return

    0.8 0.2 18.86 3.905432 18.8


    0.7 0.3 18.74 3.202249 18.6
    0.6 0.4 18.62 2.510697 18.4
    0.5 0.5 18.5 1.843909
    0.4 0.6 18.38 1.242417 18.2
    0.3 0.7 18.26 0.856971 18
    0.2 0.8 18.14 0.986103 17.8
    0.1 0.9 18.02 1.502531
    17.6
    17.4
    0 1 2 Std3De
    R - Mean P(R-Rm)2
    -3.9 3.042
    0.1 0.0045
    2.1 1.5435
    4.59
    2.142429

    Covariance
    A 0.2 5.9 -3.9 -4.602
    B 0.45 2.9 0.1 0.1305
    C 0.35 -7.1 2.1 -5.2185
    -9.69

    Correlation -0.848857

    Planet & Sun

    1 2 Std3Dev 4 5 6

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