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3. (1pt) Calculate the expected return, variance, and standard deviations of stock A and stock B, and calculate the expected return of a weighted portfolio
3. (1pt) Calculate the expected return, variance, and standard deviations of stock A and stock B, and calculate the expected return of a weighted portfolio containing 30% of stock A and 70% of stock B. Assume each scenario happens equally likely. Please show work and formulas used.
Scenario | Probability | A | B |
Boom | 1/3 | 20% | -15% |
Normal | 1/3 | 10% | 20% |
Recession | 1/3 | -10% | 15% |
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