Consider the following information:

State of

Probability of State

Rate of Return if State Occurs

Economy

of Economy

Stock A

Stock B

Stock C

Boom

.69

.12

.06

.27

Bust .31 .16 .22 -.07

a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return %

b. What is the variance of a portfolio invested 24 percent each in A and B and 52 percent in C? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

Variance of a portfolio