yes. how gay. saturday ffs!!
i am decent(good enough to pass i think) with the NPV stuff from accg101 and acst101. so i havent read the text or done tutes for that yet.
going thru that chapter 11 in the text....very....very....slowly. i swear i nearly lost it when trying to go thru the example on expected returns.
i found a little trick (i dont know if its a trick or not. lets call it one)
expected return on an asset:
E(R) = (RA1 x p1) + ... + (RAn x pn)
RAn = return on the asset 'A' in a state of econ 'n'
pn = prob. of the nth s.o.e. occuring.
expected return of a portfolio:
E(RP) = (RP1 x p1) + ... + (RPn x pn)
RPn = return of portfolio in state of econ 'n'**
pn = prob. of the nth s.o.e. occuring.
**how to find RPn, ie the return on a portfolio, given a certain s.o.e. 'n'
RPn = (RAn x #A) + (RBn x #B) + ...
RAn, return on the asset, given boom/bust
#A, proportion of asset 'A'
so the two relate in a way. anyways, hope that helps out. and good way to make sure i still remember it from 2 hrs ago.
i havent come across the covariance/rho bullshit yet. hope it isnt too bad. and stat comes in use somehow.
