Consider the following information:

Rate of Return if State Occurs

State of

Probability of State

Economy

of Economy

Stock A

Stock B

Stock C

Boom

.65

.08

.02

.23

Bust

.35

.12

.18

-.03

a.

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimalplaces, e.g., 32.16.)

b.

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)