Question
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 | .15 | .356 | .456 | .336 | ||
Good | .45 | .126 | .106 | .176 | ||
Poor | .35 | .016 | .026 | ?.056 | ||
Bust | .05 | ?.116 | ?.256 | ?.096 | ||
Requirement 1: |
Your portfolio is invested 31 percent each in A and C and 38 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Expected return of the portfolio | % |
Requirement 2: |
(a) | What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).) |
Variance of the portfolio |
(b) | What is the standard deviation of this portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Standard deviation | % |
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