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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
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 0.62 0.05 0.07 0.15 Bust 0.38 0.15 0.15 -0.09
a. What is the expected return on an equally weighted portfolio of these three stocks?
- 8.24%
- 10.74%
- 20.27%
- 23.04%
- 2.51%
b. What is the variance of a portfolio invested 30 percent each in A and B and 40 percent in C? | ||||
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