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Consider the following information: State of Economy Boom Good Poor Probability of State of Economy 0.20 0.50 0.30 Rate of Return Stock A Stock
Consider the following information: State of Economy Boom Good Poor Probability of State of Economy 0.20 0.50 0.30 Rate of Return Stock A Stock B Stock C 0.10 0.10 0.50 0.10 0.10 0.20 0.10 -0.08 0.40 Portfolio's Rate of Return a. Your portfolio is invested 30 percent in A, 30 percent in B and 40 percent in C. What is your portfolio return for each state (in percent)? Be Beam= Be Good = Be poat = b. What is the expected return of the portfolio (in percent)? C. What is the variance of this portfolio? d. What is the standard deviation of this portfolio (in percent)?
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