Question 663558: The following table describes the asset allocation of your portfolio with the corresponding return in percentage, X, and the proportion of that specific asset in the portfolio, P(X).
Money Market: X=10% , P(X)=.10
Short Term Securities: X=15% , P(X)=.10
Long Term Debt: X=25% , P(X)=.20
Large Cap Equity: X=25% , P(X)=.35
Small Cap Equity: X=15% , P(X)=.15
International Equity: X=10% , P(X)=.10
Calculate the E(X) for this portfolio.
Calculate the E{ [X-E(X)] 2} for this portfolio.
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Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Money Market: X=10% , P(X)=.10
Short Term Securities: X=15% , P(X)=.10
Long Term Debt: X=25% , P(X)=.20
Large Cap Equity: X=25% , P(X)=.35
Small Cap Equity: X=15% , P(X)=.15
International Equity: X=10% , P(X)=.10
Calculate the E(X) for this portfolio.
Procedure: Multiply each x value by its P(x) value
then add those products to get E(x)
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Calculate the E{ [X-E(X)] 2} for this portfolio.
Multiply each (x-E(x))^2 by its P(x)
then add those products to get E[x-E(x))^2]
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cheers,
Stan H.
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