5.

A portfolio is invested 40% in stock A, 30% in stock B, and 30% in stock C. Assuming that the returns are normally distributed, what is the 68% probability range of returns for any given year?

State of Probability of Rate of Return if State Occurs

Economy State of Economy Stock A Stock B Stock C

Boom 0.10 0.05 0.16 0.23

Normal 0.70 0.08 0.09 0.11

Recession 0.20 0.15 -0.03 -0.25

	a.	4.12% to 15.18%
	b.	2.29% to 12.37%
	c.	4.99% to 18.67%
	d.	3.68% to 13.89%
	e.	1.69% to 8.34%