Question
James owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (HWE). Three-quarters of James's portfolio value consists of
James owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (HWE). Three-quarters of James's portfolio value consists of BLM's shares, and the balance consists of HWE's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table
Strong 0.3 32.50% 45.50%
Normal 0.4 19.50% 26%
Weak 0.3 -26% -32.50%
The expected rate of return on Blue Llama Mining's stock over the next year is
The expected rate of return on Hungry Whale Electronics's stock over the next year is
The expected rate of return on James's portfolio over the next year is
What is the standard deviation of returns for each of the two stocks?
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