Problem 11-9 Returns and Standard Deviations (LO2, CFA5)

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	0.40	0.18	0.40	0.29
Good	0.25	0.15	0.22	0.11
Poor	0.30	0.01	0.09	0.06
Bust	0.05	0.07	0.24	0.09

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.)

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

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