Question

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	0.35	0.18	0.29	0.31
Good	0.15	0.17	0.10	0.11
Poor	0.40	0.03	–0.07	–0.08
Bust	0.10	–0.23	–0.22	–0.13

a. Your portfolio is invested 35 percent each in A and C and 30 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.)

Answer 1