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Consider the following information: Rate of return if state occurs State of economy Probability of state of economy Stock A Stock B Stock C Boom
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Consider the following information: Rate of return if state occurs
State of economy Probability of state of economy Stock A Stock B Stock C
Boom 0.68 0.21 0.15 0.27
Bust 0.32 0.07 0.19 0.03
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What is the expected return on an equally weighted portfolio of these three stocks?
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(A) 17.37%
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(B) 19.87%
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(C) 29.40%
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(D) 31.27%
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(E) 11.64%
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What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?
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(A) 0.005853
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(B) 0.011353
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(C) 0.009353
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(D) 0.013553
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(E) 0.013853
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