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Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom 0.74 0.09 0.11 0.15
Rate of Return if State Occurs | ||||
State of Economy | Probability of State of Economy | Stock A | Stock B | Stock C |
Boom | 0.74 | 0.09 | 0.11 | 0.15 |
Bust | 0.26 | 0.13 | 0.13 | 0.11 |
Requirement 1: |
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.) |
11.25% 12.43% 12.31% 9.60% 11.84% |
Requirement 2: |
What is the variance of a portfolio invested 30 percent each in A and B and 40 percent in C? (Do not round your intermediate calculations.) |
0.000503 0.000001 0.000001 0.000001 0.005000 |
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