a. Let’s say that the top-six paid UND players in the NHL have the following contracts (actually these old figures are from 2013 season)
Salary Name Team Years
$98 million Zach Parise, Wild, 13 years
$46 million Travis Zajac, Devils, 8 years
$31.5 million Jonathan Toews, Blackhawks, 5 years
$20.87 million T.J. Oshie, Blues, 5 years
$16 million Drew Stafford, Sabres, 4 years
$14.75 million Matt Greene, Kings, 5 years
What are the mean contract figure ($ million) and its standard deviation (use population formula)?
b. You have taken a course on business statistics and you suspect the reliability of the traditional mean and standard deviation. You add a chance (probability) factor to all top-six paid UND player’s NHL contracts.
Salary Name Team Years Probability
$98 million Zach Parise, Wild, 13 years 0.05
$46 million Travis Zajac, Devils, 8 years 0.10
$31.5 million Jonathan Toews, Blackhawks, 5 years 0.15
$20.87 million T.J. Oshie, Blues, 5 years 0.20
$16 million Drew Stafford, Sabres, 4 years 0.20
$14.75 million Matt Greene, Kings, 5 years 0.30
What are the expected value and the standard deviation of contract figure ($ million) now (i.e., after you include probability)?
2. Use the following scenario analysis for stocks X and Y
Bear Market Normal Market Bull Market
Probability 0.2 0.5 0.3
Stock X -20% 18% 50%
Stock Y -15% 20% 10%
a) What are the expected rates of return for stocks X and Y?
b) What are the standard deviations of returns on stocks X and Y?
c) Assume that of your $100,000 portfolio, you invest $90,000 in stock X and $10,000 in stock Y. What is the expected return on your portfolio?
