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Problem #3 (18 Marks). Consider the following information: Rate of return if state occurs State of economy Stock A Stock B Boom Good Poor Bust
Problem #3 (18 Marks). Consider the following information: Rate of return if state occurs State of economy Stock A Stock B Boom Good Poor Bust Probability of state of economy 0.2 0.35 0.3 ?? 24% 9% 3% -5% 45% 10% -10% -25% You have $3,000 invested in stock A and $2,000 invested in stock B. Compute the expected return and total risk of this portfolio
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