P13-10 Returns and Standard Deviations [LO1]

Consider the following information:

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B	Stock C
Boom	.20	.31	.41	.32
Good	.50	.18	.12	.11
Poor	.25	.04	.07	.05
Bust	.05	.15	.27	.08

Requirement 1:

Your portfolio is invested 28 percent each in A and C, and 44 percent in B. What is the expected return of the portfolio? (Do not round your intermediate calculations.)

(Click to select) 25.52% 18.22% 15.02% 11.52% 8.12%

Requirement 2:

(a)	What is the variance of this portfolio? (Do not round your intermediate calculations.)
	(Click to select) 1.2236 2.3236 -.7764 .6236 .0236

(b)	What is the standard deviation? (Do not round your intermediate calculations.)
	(Click to select) 19.77% 13.07% 12.07% 17.57% 15.37%