The following table reports forecasted returns for the stock of two different companies under three possible states of the economy:
State | Probability | Stock A | Stock B | Stock C |
Expansion | 60% | 14.95% | 18.61% | 6.69% |
Average | 40% | 7.32% | 6.70% | 3.22% |
What is the standard deviation on a portfolio that consists of 40% of funds allocated to Stock A, 25% allocated to Stock B, and the rest in Stock C? (
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