Ian Investor has created a portfolio. Ian estimates the probability of economic conditions continuing as normal is 50%. While the probability of the economy heading into a boom is 30% and the probability of the economy entering a recession state is 20%. Ians has invested as follows: 45% of the total portfolio value is invested in share X; 15% is invested in share Y, with the remainder invested in share Z. Required: (Please ensure you show all workings. No workings, no marks). A. What is the expected return Ians portfolio? (2 marks) B. What is the variance and standard deviation of the portfolios return? (2 marks) C. What benefits would Ian miss out on if he did not create a well-diversified portfolio of shares? (1 mark)

A. Showing all calculations calculate the WACC Tor Allen's Authentic Automove. Question 4 - Portfolio - 5 marks lan Investor has created a portfolio. Ian estimates the probability of economic conditions continuing as normal is 50%. While the probability of the economy heading into a boom is 30% and the probability of the economy entering a recession state is 20%. lan's has invested as follows: 45% of the total portfolio value is invested in share X; 15% is invested in share Y, with the remainder invested in share Z. Expected Probability State of Economy Expected Expected Returns Returns of Returns of of State Stock X Stock Y Stock Z Boom Normal Recession 0.18 0.08 -0.03 0.06 0.10 0.19 0.22 0.15 -0.25 Required: (Please ensure you show all workings. No workings, no marks). A. What is the expected return lan's portfolio? (2 marks) B. What is the variance and standard deviation of the portfolio's return? (2 marks) C. What benefits would lan miss out on if he did not create a well-diversified portfolio of shares ? (1 mark) ************** End of Test 2******************* FORMULA SHEET Lecture handout we....pdf Lecture handout We..pdf POP Weighted Average C....pdf ro SAMSUNG