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State of Economy Probability of State Return on Asset J Return on Asset K State Return...

State of Economy Probability of State Return on Asset J Return on Asset K State Return on Asset L

State Boom 0.28 0.07 0.23 0.26

Growth 0.36 0.07 0.12 0.2

Stagnant 0.21 0.07 0.06 0.07

Recession 0.15 0.07 -0.07 -0.19

a.  What is the expected return of each​ asset?

b.  What is the variance and the standard deviation of each​ asset?

c.  What is the expected return of a portfolio with 99​% in asset​ J, 55​% in asset​ K, and 36​% in asset​ L?

d.  What is the​ portfolio's variance and standard deviation using the same asset weights from part ​(c​)?

​Hint: Make sure to round all intermediate calculations to at least seven​ (7) decimal places.

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