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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 | .30 | .23 | .31 | .30 | ||||||||||||||||
Good | .15 | .16 | .11 | .12 | ||||||||||||||||
Poor | .30 | .02 | .08 | .07 | ||||||||||||||||
Bust | .25 | .22 | .24 | .13 | ||||||||||||||||
a. | Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
Expected return | % |
b-1. | What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.) |
Variance of this portfolio |
b-2. | What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
Standard deviation | % |
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