Problem 11-9

Consider the following information:

		Rate of Return if State Occurs
State of	Probability of
Economy	State of Economy	Stock A	Stock B	Stock C
Boom	.40	.18	.40	.29
Good	.25	.15	.22	.11
Poor	.30	.01	.09	.06
Bust	.05	.07	.24	.09

a.	Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Expected return

%

b-1.	What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

Variance of this portfolio

b-2.	What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Standard deviation

%