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 |
| .20 |
|
| .36 |
|
| .46 |
|
| .26 |
|
Good |
| .55 |
|
| .20 |
|
| .17 |
|
| .11 |
|
Poor |
| .20 |
| .04 |
| .07 |
| .06 |
| |||
Bust |
| .05 |
| .14 |
| .32 |
| .09 |
| |||
|
a. | Your portfolio is invested 26 percent each in A and C, and 48 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) |
Expected return | % |
b-1. | What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161)) |
Variance |
|
b-2. | What is the standard deviation? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) |
Standard deviation | % |
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