Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom
Consider the following information:
Rate of Return if State Occurs | ||||||||||||
State of | Probability of | |||||||||||
Economy | State of Economy | Stock A | Stock B | Stock C | ||||||||
Boom | 0.65 | 0.11 | 0.19 | 0.37 | ||||||||
Bust | 0.35 | 0.12 | 0.06 | ?0.05 | ||||||||
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 | % |
b. | What is the variance of a portfolio invested 15 percent each in A and B and 70 percent in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) |
Variance |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started