Problem 13-9 Returns and Variances [LO1]

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		.62			.09			.17			.35
Bust		.38			.20			.10			.06

a.	What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.	What is the variance of a portfolio invested 16 percent each in A and B and 68 percent in C?