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Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom
Consider the following information:
State of Economy | Probability of State of Economy | Rate of Return if State Occurs | ||||||||||
Stock A | Stock B | Stock C | ||||||||||
Boom | 0.56 | 0.06 | 0.14 | 0.34 | ||||||||
Bust | 0.44 | 0.11 | 0.02 | 0.07 | ||||||||
a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Expected return %
b. What is the variance of a portfolio invested 25% each in A and B and 50% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.)
Variance
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