Returns and Variances Consider the following information: Rate of return if state occurs State of economy Probability

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Returns and Variances Consider the following information:

Rate of return if state occurs State of economy Probability of state of economy Equity A

Equity B

Equity C

Boom 0.35 0.07 0.15 0.33 Bust 0.65 0.13 0.03 −0.06

(a) What is the expected return on an equally weighted portfolio of these three equities?

(b) What is the variance of a portfolio invested 20 per cent each in A and B and 60 per cent in C?

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Fundamentals Of Corporate Finance

ISBN: 9780077178239

3rd Edition

Authors: David Hillier, Iain Clacher, Stephen A. Ross

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Question Posted: Jul 19, 2024 05:00 PM

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Returns and Variances Consider the following information: Rate of return if state occurs State of economy Probability

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Fundamentals Of Corporate Finance

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