Question

Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A...

Rate of Return if State Occurs

State of Economy

Probability of State of Economy

Stock A

Stock B

Stock C

Boom

.10

.18

.48

.33

Good

.300

.11

.18

.15

Poor

.40

.05

-.09

-.05

Burst

.20

-.03

-.32

-.09

a- Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio?

b- What is the variance of this portfolio? The standard deviation?

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