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

0.70

0.14

0.21

0.39

Bust

0.30

0.12

0.02

?

0.07

What is the expected return on an equally weighted portfolio of these three stocks?

What is the variance of a portfolio invested 25 percent each in A and B and 50 percent in C?