QUESTION 1

Use the following table of states of the economy and stock returns to calculate the percentage standard deviation of a portfolio of a portfolio of 80 percent Roten and the rest in Bradley.

		Security if State	Returns Occurs
	Prob of State of Economy	Roten	Bradley
Bust	0.2	-12%	30%
Boom	?	37	5

3 points

QUESTION 2

Use the following information to calculate the percentage expected return a portfolio that is 47.5 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

	3 Dorrs, Inc.	Down Co.
Expected return	28%	5%
Standard deviation	35	11
Correlation	72

1 points

QUESTION 3

Use the following information to calculate the percentage standard deviation of a portfolio that is 61.4 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:

	3 Dorrs, Inc.	Down Co.
Expected return	16%	11%
Standard deviation	41	33
Correlation	0.76