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Question 6 What is the variance of the returns on a portfolio that is invested 40 percent in Stock S and 60 percent in Stock

Question 6

  1. What is the variance of the returns on a portfolio that is invested 40 percent in Stock S and 60 percent in Stock T?

    State of

    Economy

    Probability of

    State of Economy

    Rate of Return

    if State Occurs

    Stock S

    Stock T

    Boom

    .06

    .22

    .18

    Normal

    .92

    .15

    .14

    Bust

    .02

    .26

    .09

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