Question

**Problem 11-10 Returns and Standard Deviations [LO 1,
2]**

Consider the following information:

State of | Probability of | Rate of Return If State Occurs | |||||||||||

Economy | State of Economy | Stock A | Stock B | Stock C | |||||||||

Boom | .19 | .360 | .460 | .340 | |||||||||

Good | .41 | .130 | .110 | .180 | |||||||||

Poor | .31 | .020 | .030 | ? | .066 | ||||||||

Bust | .09 | ? | .120 | ? | .260 | ? | .100 | ||||||

Your portfolio is invested 30 percent each in A and C and 40
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.)**

Expected return %

What is the variance of this portfolio?

Variance

What is the standard deviation of this portfolio?

Standard deviation %

Answer #1

Problem 13-10 Returns
and Standard Deviations [LO1]
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
.20
.38
.48
.28
Good
.50
.14
.19
.12
Poor
.20
−.05
−.08
−.06
Bust
.10
−.19
−.23
−.09
a.
Your portfolio is
invested 22 percent each in A and C, and 56 percent in B. What is
the expected return of the portfolio? (Do not...

Consider the following information:
State of
Probability of
Rate of Return If State Occurs
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.19
.366
.466
.346
Good
.41
.136
.116
.186
Poor
.31
.026
.036
−
.091
Bust
.09
−
.126
−
.266
−
.106
Your portfolio is invested 31 percent each in A and C and 38
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your...

Consider the following information:
State of
Probability of
Rate of Return If State Occurs
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.15
.362
.462
.342
Good
.45
.132
.112
.182
Poor
.35
.022
.032
?
.068
Bust
.05
?
.122
?
.262
?
.102
Your portfolio is invested 32 percent each in A and C and 36
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your...

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
.31
.41
.21
Good
.60
.16
.12
.10
Poor
.20
–
.03
–
.06
–
.04
Bust
.05
–
.11
–
.16
–
.08
a.
Your portfolio is invested 30 percent each in A and
C, and 40 percent in B. What is the expected
return of the portfolio? (Do not round...

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 .10 .35 .40 .27 Good .60 .16 .17 .08 Poor .25
− .01 − .03 − .04 Bust .05 − .12 − .18 − .09 a. Your portfolio is
invested 30 percent each in A and C, and 40 percent in B. What is
the expected return of the portfolio? (Do not round intermediate
calculations...

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
.10
.35
.40
.27
Good
.60
.16
.17
.08
Poor
.25
−
.01
−
.03
−
.04
Bust
.05
−
.12
−
.18
−
.09
a.
Your portfolio is invested 30 percent each in A and C, and 40
percent in B. What is the expected return of the portfolio?
(Do not round...

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
.10
.35
.40
.27
Good
.60
.16
.17
.08
Poor
.25
−
.01
−
.03
−
.04
Bust
.05
−
.12
−
.18
−
.09
a.
Your portfolio is invested 30 percent each in A and C, and 40
percent in B. What is the expected return of the portfolio?
(Do not round...

Consider the following information about three stocks: Rate of
Return If State Occurs State of Probability of Economy State of
Economy Stock A Stock B Stock C Boom .20 .24 .36 .55 Normal .55 .17
.13 .09 Bust .25 .00 −.28 −.45 a-1 If your portfolio is invested 40
percent each in A and B and 20 percent in C, what is the portfolio
expected return? (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2...

Consider the following information on a portfolio of three
stocks:
State of
Economy
Probability of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
Boom
.12
.07
.32
.45
Normal
.55
.15
.27
.25
Bust
.33
.16
–.26
–.35
a.
If your portfolio is invested 40 percent each in A and B and 20
percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation? (Do not...

Consider the following information on a portfolio of three
stocks:
State of
Economy
Probability of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
Boom
.15
.04
.33
.55
Normal
.60
.09
.13
.19
Bust
.25
.15
–.14
–.28
a.
If your portfolio is invested 40 percent each in A and B and 20
percent in C, what is the portfolio’s expected return? The
variance? The standard deviation? (Do not...

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