Question

Problem 13-10 Returns and Standard Deviations [LO1]

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 | .20 | .38 | .48 | .28 | ||||||||

Good | .50 | .14 | .19 | .12 | ||||||||

Poor | .20 | −.05 | −.08 | −.06 | ||||||||

Bust | .10 | −.19 | −.23 | −.09 | ||||||||

a. |
Your portfolio is
invested 22 percent each in A and C, and 56 percent in B. What is
the expected return of the portfolio? |

Expected return | % |

b-1 |
What is the
variance of this portfolio? (Do not round intermediate
calculations and round your answer to 5 decimal places, e.g.,
32.16161.) |

Variance |

b-2 |
What is the standard
deviation? |

Standard deviation |

Answer #1

Problem 11-10 Returns and Standard Deviations [LO 1,
2]
Consider the following information:
State of
Probability of
Rate of Return If State Occurs
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.19
.360
.460
.340
Good
.41
.130
.110
.180
Poor
.31
.020
.030
?
.066
Bust
.09
?
.120
?
.260
?
.100
Your portfolio is invested 30 percent each in A and C and 40
percent in B. What is the expected return of the...

Consider the following information:
State of
Probability of
Rate of Return If State Occurs
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.19
.366
.466
.346
Good
.41
.136
.116
.186
Poor
.31
.026
.036
−
.091
Bust
.09
−
.126
−
.266
−
.106
Your portfolio is invested 31 percent each in A and C and 38
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your...

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
.15
.31
.41
.21
Good
.60
.16
.12
.10
Poor
.20
–
.03
–
.06
–
.04
Bust
.05
–
.11
–
.16
–
.08
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...

Consider the following information:
State of
Probability of
Rate of Return If State Occurs
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.15
.362
.462
.342
Good
.45
.132
.112
.182
Poor
.35
.022
.032
?
.068
Bust
.05
?
.122
?
.262
?
.102
Your portfolio is invested 32 percent each in A and C and 36
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your...

Consider the following information about three stocks: Rate of
Return If State Occurs State of Probability of Economy State of
Economy Stock A Stock B Stock C Boom .20 .24 .36 .55 Normal .55 .17
.13 .09 Bust .25 .00 −.28 −.45 a-1 If your portfolio is invested 40
percent each in A and B and 20 percent in C, what is the portfolio
expected return? (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2...

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...

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...

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...

Consider the
following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.30
.36
.48
.60
Normal
.40
.15
.13
.11
Bust
.30
.06
−.28
−.48
a-1.
If your portfolio is invested 25 percent each in A and B and 50
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations and enter your answer as a
percent...

Consider the following
information on a portfolio of three stocks:
State of
Economy
Probability
of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
Boom
.14
.05
.35
.47
Normal
.52
.13
.25
.23
Bust
.34
.19
–.24
–.38
Required:
(a)
If your portfolio is invested 42 percent each in A and B and 16
percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation? (Do...

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