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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 | 0.76 | 0.09 | 0.23 | 0.11 |
| Bust | 0.24 | 0.19 | 0.09 | 0.05 |
| a. What is the expected return on an equally weighted portfolio of these three stocks? |
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| b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? |
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Cases in Financial Reporting
Authors: Michael J. Sandretto
1st edition
538476796, 978-0538476799
