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What is the variance of the returns on a portfolio that is invested 40 percent in...

What is the variance of the returns on a portfolio that is invested 40 percent in Stock S and 60 percent in Stock T?

State of
Economy		 Probability of
State of Economy		 Rate of Return
if State Occurs
Boom .06 .22 .18
Normal .92 .15 .14
Bust .02 − .26 .09

Multiple Choice

  • .00083

  • 00136
  • 00107
  • 00091
  • 00118
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