Returns and Standard Deviations 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 .70 .07 .15 .33 Bust .30 .13 .03
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a. What is the expected return on an equally weighted portfolio of these three stocks?

b. What is the variance of a portfolio invested 20 percent each in A and B, and 60 percent in C? LO.1