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	0.10	0.18	0.48	0.33
Good	0.30	0.11	0.18	0.15
Poor	0.40	0.05	?0.09	?0.05
Bust	0.20	?0.03	?0.32	?0.09

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. Enter your answer as a percent rounded to 2 decimal places. )

b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

b-2. What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Answer 1