Question

Consider the following two stocks.

Consider the following two stocks.

	Probabilities (pi )	Stock "A"	Stock "B"
Recession	p1= 34%	-3%	1%
Normal	p2= 21%	3%	-11%
Boom	p3= 45%	14%	22%

The portfolio weights for stocks "A" and "B" are 0.35 and 0.65, respectively.

What are the expected returns of stock "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.

E(ra)=     
Correct response: 5.91

E(rb)=    
Correct response: 7.93

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Using the correct answers from the previous question, what are the standard deviations of stocks "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.

SDa= ​  
Correct response: 7.63±0.01

SDb= ​  
Correct response: 13.44±0.01

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Using the correct answers from the previous questions, what is the expected return of the portfolio? Enter your answer as a percentage. Do not put the percent sign in your answer. Round your answer to 2 DECIMAL PLACES.

E(rp)= ​    
Correct response: 7.22

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Using the correct answers from the previous questions, what is the standard deviation of the portfolio? Enter your answer as a percentage. Do not put the percentage sign in your answer. Round your answer to 2 DECIMAL PLACES.

SDp= ​

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Answer 1