Question

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.)

Answer 1