Chapter $13($i$)$

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Problem $13-9$ Returns and Variances LO$1,2)$

Consider the following information:

$\backslash$table$[[$State of$,$Probability of$,$Rate of Return if State Occurs$],[$Economy$,$State of Economy,Stock A$,$Stock B$,$Stock C$],[$Boom$,0\mathrm{.}70,0\mathrm{.}14,0\mathrm{.}21,0\mathrm{.}39],[$Bust$,0\mathrm{.}30,0\mathrm{.}11,0\mathrm{.}02,-0\mathrm{.}07]]$

a$.$ What is the expected return on an equally weighted portfolio of these three stocks? $($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Expected return $3$

b$.$ What is the variance of a portfolio invested $25\%$ each in A and B and $50\%$ in C$?($Do not round intermediate calculations. Round the final answer to $6$ decimal places.$)$

Variance