Question
10. Returns and Standard Deviations (LO1, 2) Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs
10. Returns and Standard Deviations (LO1, 2) Consider the following information:
| State of Economy | Probability of State of Economy | Rate of Return if State Occurs | ||
|
|
| Stock A | Stock B | Stock C |
| Boom | 0.1 | 0.35 | 0.45 | 0.27 |
| Good | 0.6 | 0.16 | 0.1 | 0.08 |
| Poor | 0.25 | -0.01 | -0.06 | -0.04 |
| Bust | 0.05 | -0.12 | -0.2 | -0.09 |
- Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio?
- What is the variance of this portfolio? The standard deviation?
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Millon Cornett
1st International Edition
0071181334, 9780071181334
