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	0.21	0.33	0.15
Bust	0.38	0.09	0.19	0.05

Requirement 1:

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.)

(Click to select)18.44%20.94%30.47%33.24%12.71%

Requirement 2:

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round your intermediate calculations.)

(Click to select)0.0084550.0106550.0109550.0064550.002955

rev: 09_20_2012, 10_19_2015_QC_CS-21001, 03_30_2016_QC_CS-46530

eBook & Resources

eBook: 13.2. Portfolios