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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 | .58 | .07 | .15 | .33 | ||||||||
Bust | .42 | .16 | .06 | .06 |
a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %
b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.) Variance
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