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ANSWER Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Stock C Boom .66 .09 .03
ANSWER
Rate of Return if State Occurs | ||||
State of | Probability of State | |||
Economy | of Economy | Stock A | Stock B | Stock C |
Boom | .66 | .09 | .03 | .24 |
Bust | .34 | .13 | .19 | .04 |
Required: |
(a) | What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimalplaces(e.g., 32.16).) |
Expected return | % |
(b) | What is the variance of a portfolio invested 21 percent each in A and B and 58 percent in C? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).) |
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