Question

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		.33	.45	.33
Good		.55		.11	.10	.17
Poor		.20		.02	.02	−.05
Bust		.10		−.12	−.25	−.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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b-1.	What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.)
b-2.	What is the standard deviation of this portfolio?

Answer 1