Quantitative

The following table contains information on the 2002 resident population of the U.S., by age (Source: The New York Almanac2004, page 277).

|Age |Younger than 18 years|18 to 24 years old |25 to 44 years old |45 to 64 years old |65 years and older |
| |old | | | ||

* * *Total of resident population 4,485,508

a. If a resident of the U.S. is chosen at random, find the probability that he or she is 25 to 44 years old.

1,270,419 = 0.283
4,485,508

b. If a resident is chosen at random find the probability that he or she
is older than
24 years old.

1,270,419 + 1, 068,243 +588,542 = 0.652
4,485,508

c. In what age category does the median age fall.

It falls in the category of 25 to 44 years old.
Chapter 6 Exercise A6
The Expected Return on a Portfolio is computed as the weighted average of the expected returns on the stocks which comprise the portfolio. The weights reflect the proportion of the portfolio invested in thestocks. This can be expressed as follows:
[pic]
where
• E[Rp] = the expected return on the portfolio,
• N = the number of stocks in the portfolio,
• wi = the proportion of the portfolio invested in stock i, and
• E[Ri] = the expected return on stock i.
For a portfolio consisting of two assets, the above equation can be expressed as
[pic]
|Asset || |
|Money Market Securities |10% |4% |
|Corporate Bonds |20% |8% |
|Equities |70% |12% |
| | | |
| |10.400% | |

In this case using the text’sformula: rp= w1r1 + (1-w1)r2
rp= (10% * 4%) + (20% * 8%) + (70% * 12%) = 10.4 %

Chapter 6 Exercise B-6

|State of the |Probability |1 |2 |3 |
|Economy | | | | |
|recession |0.1 |9 |3 |15|
|stable |0.7 |13 |10 |11 |
|boom |0.2 |17 |22 |5 |
| | | | | |
| | | || |
| |Project 1 | | | |
| |expected return |13.4 | | |
| |variance |11.7 | | |
| |SD |10.2| | |
| | | | | |
| |Project 2 | | | |
| |expected return |0.046 | | |
| |variance|3.081 | | |
| |SD |0.082 | | |
| | | | | |
| |Project 3 | | | |
| |expected...