State of Economy

Recession
Below Average
Average
Above Average
Boom

Probability
0.1
0.2
0.4
0.2
0.1

1 Year T-Bond
8%
8%
8%
8%
8%

TECO Gold Hill S&P 500 Fund

-8%
2%
14%
25%
33%

18%
23%
7%
-3%
2%

-15%
0%
15%
30%
45%

State of Economy
Recession
Below Average
Average
Above Average
Boom

1 Year T-Bond
Expected Return TECO

Probability 1 Year T-Bond

0.1
0.2
0.4
0.2
0.1

0.08
0.08
0.08
0.08
0.08

0.00800
0.01600
0.03200
0.01600
0.00800
0.08000

-0.08
0.02
0.14
0.25
0.33

0.00000
State of Economy
Recession
Below Average
Average
Above Average
Boom
Standard Deviation
Coefficient of
Variation

Probability 1 Year T-Bond

0.1
0.2
0.4
0.2
0.1

TECO

0.08
0.08
0.08
0.08
0.08
0
0

-0.08
0.02
0.14
0.25
0.33

TECO
Expected Return

Gold Hill

-0.00800
0.00400
0.05600
0.05000
0.03300
0.13500

0.18
0.23
0.07
-0.03
0.02

Gold Hill
Expected Return
0.01800
0.04600
0.02800
-0.00600
0.00200
0.08800

Gold Hill
-0.215
-0.115
0.005
0.115
0.195

0.046
0.013
0.000
0.013
0.038

0.005
0.003
0.000
0.003
0.004
0.01373
0.11715
0.86781

0.18
0.23
0.07
-0.03
0.02

0.092
0.142
-0.018
-0.118
-0.068

0.00846
0.02016
0.00032
0.01392
0.00462

0.00085
0.00403
0.00013
0.00278
0.00046
0.00826
0.09086
1.03253

S&P 500 Fund

-0.15
0.00
0.15
0.30
0.45

S&P 500 Fund

Expected Return
-0.01500
0.00000
0.06000
0.06000
0.04500
0.15000

S&P 500 Fund

-0.15
0.00
0.15
0.30
0.45

-0.3
-0.2
0.0
0.2
0.3

0.09
0.0225
0
0.0225
0.09

0.009
0.0045
0
0.0045
0.009
0.027
0.164317
1.095445

5a
State of Economy
Recession
Below Average
Average
Above Average
Boom

Probability

TECO

0.1
0.2
0.4
0.2
0.1

-0.08
0.02
0.14
0.25
0.33

TECO
Expected Returns S&P 500 Fund
-0.0080
0.0040
0.0560
0.0500
0.0330

-0.15
0.00
0.15
0.30
0.45

Question: Would this portfolio (TECO-S&P) have the same risk-reducing effect as the Gold-Hill-Teco portfolio?
Answer: They do not have the same risk reducing benefit because of the higher expected return and coefficient of variation o
Fund. Also, the TECO-S&P portfolio's standard deviation and coefficient of variation is much higher than each indiviadual stoc
this fact justifies that TECO-S&P is almost highly correlated with each other (.9899) to form a risky porfolio.

5b

State of Economy
10/90
Recession
Below Average
Average
Above Average
Boom

State of Economy
20/80
Recession
Below Average
Average

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4
0.2
0.1

-0.08
0.02
0.14
0.25
0.33

-0.15
0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4

-0.0080
0.0040
0.0560
0.0500
0.0330

-0.08
0.02
0.14

-0.0080
0.0040
0.0560

-0.15
0.00
0.15

Above Average
Boom

State of Economy
30/70
Recession
Below Average
Average
Above Average
Boom

State of Economy
40/60
Recession
Below Average
Average
Above Average
Boom

State of Economy
60/40
Recession

0.2
0.1

0.25
0.33

-0.08
0.02
0.14
0.25
0.33

-0.08
0.02
0.14
0.25
0.33

-0.15
0.00
0.15
0.30
0.45

-0.0080
0.0040
0.0560
0.0500
0.0330

-0.15
0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1

-0.0080
0.0040
0.0560
0.0500
0.0330

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4
0.2
0.1

0.30
0.45

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4
0.2
0.1

0.0500
0.0330

-0.08

-0.0080

-0.15

Below Average
Average
Above Average
Boom

State of Economy
70/30
Recession
Below Average
Average
Above Average
Boom

0.2
0.4
0.2
0.1

0.02
0.14
0.25
0.33

State of Economy
80/20
Recession
Below Average
Average
Above Average
Boom

Probability TECO

State of Economy

Probability TECO

0.1
0.2
0.4
0.2
0.1

0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4
0.2
0.1

0.0040
0.0560
0.0500
0.0330

-0.08
0.02
0.14
0.25
0.33

-0.0080
0.0040
0.0560
0.0500
0.0330

-0.15
0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund
-0.08
0.02
0.14
0.25
0.33

-0.0080
0.0040
0.0560
0.0500
0.0330

-0.15
0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund

90/10
Recession
Below Average
Average
Above Average
Boom

State of Economy
100/0
Recession
Below Average
Average
Above Average
Boom

TECO Weight
S&P Weight
Expected Return
Standard Deviation
Coefficient of Variation

0.1
0.2
0.4
0.2
0.1

-0.08
0.02
0.14
0.25
0.33

-0.15
0.00
0.15
0.30
0.45

TECO
Expected Returns S&P 500 Fund

Probability TECO
0.1
0.2
0.4
0.2
0.1

-0.0080
0.0040
0.0560
0.0500
0.0330

-0.08
0.02
0.14
0.25
0.33

Portfolio A Portfolio B
50/50
0/100
50%
0%
50%
100%
0.01425
0.15000
0.01406
0.16432
0.98699
1.09545

-0.0080
0.0040
0.0560
0.0500
0.0330

Portfolio C
10/90
10%
90%
0.14850
0.11356
0.76474

-0.15
0.00
0.15
0.30
0.45

Portfolio D
20/80
20%
80%
0.14700
0.11375
0.77384

S&P 500 Fund

Expected Returns
-0.0150
0.0000
0.0600
0.0600
0.0450

TECO and S&P 500 Fund

Weighted Returns Portfolio 50/50
-0.01150
0.00100
0.01450
0.02750
0.03900
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

-0.00115
0.0002
0.0058
0.0055
0.0039
0.01425
0.014064583
0.986988293
0.989887011

e Gold-Hill-Teco portfolio?
pected return and coefficient of variation of TECO-S&P 500
is much higher than each indiviadual stocks. Therefore,
to form a risky porfolio.

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.01430
0.00040
0.05960
0.05900
0.04380
0.148500
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600

-0.01360
0.00080
0.05920

0.148500
0.113563414
0.764736795
0.989887011

0.0600
0.0450

0.05800
0.04260
0.147000
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.01290
0.00120
0.05880
0.05700
0.04140
0.145500
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.01220
0.00160
0.05840
0.05600
0.04020
0.144000
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150

-0.01080

0.147000
0.113754235
0.773838334
0.989887011

0.145500
0.113949028
0.783154832
0.989887011

0.144000
0.114147773
0.792692866
0.989887011

0.0000
0.0600
0.0600
0.0450

0.00240
0.05760
0.05400
0.03780
0.141000
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.01010
0.00280
0.05720
0.05300
0.03660
0.139500
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.00940
0.00320
0.05680
0.05200
0.03540
0.138000
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

0.141000
0.114557034
0.812461233
0.989887011

0.139500
0.114767508
0.822706154
0.989887011

0.138000
0.114981851
0.833201817
0.989887011

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.00870
0.00360
0.05640
0.05100
0.03420
0.136500
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

S&P 500 Fund

Expected Returns

TECO and S&P 500 Fund

Weighted Returns

-0.0150
0.0000
0.0600
0.0600
0.0450

-0.00800
0.00400
0.05600
0.05000
0.03300
0.135000
Expected Return
Standard Deviation
Coefficient of Variation
Correlation Coefficient

Portfolio E
30/70
30%
70%
0.14550
0.11395
0.78315

Portfolio F
40/60
40%
60%
0.14400
0.11415
0.79269

0.136500
0.115200039
0.84395633
0.989887011

0.135000
0.115422052
0.85497816
0.989887011

Portfolio G
60/40
60%
40%
0.14100
0.11456
0.81246

Portfolio H
70/30
70%
30%
0.13950
0.11477
0.82271

Standard Deviation

0.1600
0.1400

STDEV

6.63063E-05
3.51125E-05
2.5E-08
3.51125E-05
6.12563E-05
0.000197813
0.014064583

0.1200
0.1000
0.0800
0.0600
0.0400
0.0200
0.0000
-0.0200
-0.0400
-0.0600

Standard Deviation

Variance
Standard Deviation

0.002650384
0.004386722
0.003161284
0.00160205
0.001096209
0.012896649
0.113563414

Standard Deviation
0.002627641
0.004363058
0.003189796

Variance
Standard Deviation

0.00163805
0.001121481
0.012940026
0.113754235

Standard Deviation

Variance
Standard Deviation

0.002604996
0.004339458
0.003218436
0.00167445
0.001147041
0.012984381
0.113949028

Standard Deviation

Variance
Standard Deviation

0.002582449
0.004315922
0.003247204
0.00171125
0.001172889
0.013029714
0.114147773

Standard Deviation
0.002537649

Variance
Standard Deviation

0.004269042
0.003305124
0.00178605
0.001225449
0.013123314
0.114557034

Standard Deviation

Variance
Standard Deviation

0.002515396
0.004245698
0.003334276
0.00182405
0.001252161
0.013171581
0.114767508

Standard Deviation

Variance
Standard Deviation

0.002493241
0.004222418
0.003363556
0.00186245
0.001279161
0.013220826
0.114981851

Standard Deviation

Variance
Standard Deviation

0.002471184
0.004199202
0.003392964
0.00190125
0.001306449
0.013271049
0.115200039

Standard Deviation

Variance
Standard Deviation

Portfolio I
80/20
80%
30%
0.13800
0.11498
0.83320

0.002449225
0.00417605
0.0034225
0.00194045
0.001334025
0.01332225
0.115422052

Portfolio J
90/10
90%
30%
0.13650
0.11520
0.84396

Portfolio K
100/0
100%
30%
0.13500
0.11542
0.85498

TECO and S&P 500 Fund

Weighted Returns
S&P 500 Fund
Expected Returns
TECO
Expected Returns