Question

Consider the following information:

  

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B	Stock C
Boom	0.70	0.13	0.11	0.13
Bust	0.30	0.09	0.13	0.03

  

Requirement 1:

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.)

  

Requirement 2:

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round your intermediate calculations.)

Answer 1

1)

2)