Question
Consider the following information: Rate of Return if State Occurs State of Economy Probability of...
| Consider the following information: |
| Rate of Return if State Occurs | ||||
| State of Economy | Probability of State of Economy |
Stock A | Stock B | Stock C |
| Boom | .15 | .32 | .42 | .33 |
| Good | .45 | .19 | .13 | .12 |
| Poor | .30 | –.05 | –.08 | –.06 |
| Bust | .10 | –.16 | –.28 | –.09 |
|
Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? |
| What is the variance of this portfolio? |
| What is the standard deviation? |
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