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	0.25	0.18	0.37	0.27
Good	0.15	0.13	0.14	0.15
Poor	0.40	–0.01	–0.11	–0.04
Bust	0.20	–0.19	–0.16	–0.13

a. Your portfolio is invested 40 percent each in A and C and 20 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