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 | 0.40 | 0.18 | 0.40 | 0.29 |
Good | 0.25 | 0.15 | 0.22 | 0.11 |
Poor | 0.30 | 0.01 | –0.09 | –0.06 |
Bust | 0.05 | –0.07 | –0.24 | –0.09 |
a. Your portfolio is invested 20 percent each in A and C and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.)
b-2. What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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