Consider the following information: |
Rate of Return if State Occurs | |||||||||||||||
State of | Probability of | ||||||||||||||
Economy | State of Economy | Stock A | Stock B | Stock C | |||||||||||
Boom | .10 | .35 | .40 | .27 | |||||||||||
Good | .60 | .16 | .17 | .08 | |||||||||||
Poor | .25 | − | .01 | − | .03 | − | .04 | ||||||||
Bust | .05 | − | .12 | − | .18 | − | .09 | ||||||||
a. |
Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
b-1. | What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) |
b-2. | What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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