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Consider the following information about three stocks: Expected State of Probability of Expected State Economy of returns of Economy Stock C Boom 35% 24% 36%
Consider the following information about three stocks: Expected State of Probability of Expected State Economy of returns of Economy Stock C Boom 35% 24% 36% 55% Normal 50% 17% 13% 9% Bust 15% 0% -28% -45% a. If your portfolio is invested, 40 percent each in stock A and stock B and 20 percent in stock C, what is the portfolio expected return and the standard deviation and variance. b. You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 15 percent in Stock S, and 40 percent in Stock T. The betas for these four stocks are 84, 1.17, 1.11, and 1.36, respectively. What is the portfolio beta? Expected of returns of returns Stock A Stock B
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