Example: Suppose that we think there are three states of the world {\"good", \"normal\'I'Iclalll. UI LIIC BLUL-h yuu LURE LI IE uUIII Uluc UI LIIC ill-Uh\" all\" UIVIUC IL Ll" I.I IC entire value of the portfolio. Mathematically that looks like this: dollar value of stock \"ll-U: = . . dollar value of ('ntlre portfolio Example: Suppose you have three stocks in your portfolio. In the portfolio you have $50 of Stock A, $70 of Stock B, and $100 of Stock C, what is the weight of each stock in the portfolio? Example: Suppose you have three stocks in your portfolio. Suppose you have ten shares of Stock A which is currently trading at $15 per share; you have 20 shares of Stock B which is currently trading at $19 per share; and 30 shares of Stock C which is currently trading at $22 per share. What is the weight of each stock in your portfolio? Suppose the next day you find that StockA had a return of positive 5 percent, Stock B had a return of negative 2 percent, and Stock (2 had a return of positive 9 percent. What is the portfolio's return? What are the new weights in your portfolio? Example: Suppose you want to invest in one stock and one bond. The expected return and standard deviation of returns are presented in the table below. Su ppose you want to invest 30 percent in the bond and 70 percent in the stock. What is the portfolio's expected return and standard deviation if the correlation between the two assets is 0.5, 0.2, 43.1? Expected Standa rd Return {96} Deviation (96} Example: Suppose you want to invest in one stock and one bond. The expected return and standard deviation of returns are presented in the table below. Suppose the correlation between the two assets is 0.2. What is the portfolio expected return and standard deviation if you invest 30 percentin the stock? How about 60 percent? How about 90 percent? Expected Standa rd Return {96} Deviation (96}