Question

Consider the following information:    Rate of Return if State Occurs State of Economy Probability of...

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.)

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