Answered step by step
Verified Expert Solution
Link Copied!

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 .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 %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Behavioral Finance And Wealth Management

Authors: Michael M. Pompian

2nd Edition

1118014324, 978-1118014325

More Books

Students also viewed these Finance questions