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You decide to invest in a portfolio consisting of 16 percent Stock A, 51 percent Stock...

You decide to invest in a portfolio consisting of 16 percent Stock A, 51 percent Stock B, and the remainder in Stock C. Based on the following information, what is the variance of your portfolio?

State of Economy Probability of State Return if State Occurs
of Economy Stock A Stock B Stock C
Recession .122 − 10.90% − 4.30% − 13.30%
Normal .681 10.20% 10.82% 17.70%
Boom .197 21.71% 25.43% 30.13%

Multiple Choice

  • .00844

  • .00908

  • .01026

  • .00953

  • .01226

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