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Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Stock C Boom .75 .07 .01 .27

Rate of Return if State Occurs
State of Probability of State
Economy of Economy Stock A Stock B Stock C
Boom .75 .07 .01 .27
Bust .25 .12 .19 .05

Required:
(a)

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Expected return %

(b)

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?

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