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	.30	.35	.45	.35
Good	.30	.11	.20	.21
Poor	.20	.03	.13	.12
Bust	.20	-.03	.06	-12.88

Requirement 1:

Your portfolio is invested 14 percent each in A and C, and 72 percent in B. What is the expected return of the portfolio? (Do not round your intermediate calculations. Note: All rates are given in decimal format here!)

-15.58%

-16.13%

-14.67%

-15.40%

-13.20%

Requirement 2:

(a)	What is the variance of this portfolio? (Do not round your intermediate calculations.)
	.6343 .2226 .7345 .6905 .6677

(b)	What is the standard deviation? (Do not round your intermediate calculations.)
	47.18% 81.71% 83.10% 85.80% 77.63%