1. A portfolio is invested 40% in stock E, 30% in stock F, and 30% in stock G. 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 E Stock F Stock G

Boom 20% 5% 16% 23%

Normal 50% 8% 9% 11%

Recession 30% 15% -3% -25%

1. 4.7% to 12.77%
2. 4.12% to 15.18%
3. 1.69% to 8.34%
4. 2.76% to 17.42%