Requirement 1:

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.)

A) 18.72%

B) 21.22%

C) 30.75%

D) 33.52%

E) 12.99%

Requirement 2:

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round your intermediate calculations.)

A) 0.014800

B) 0.012300

C) 0.010300

D) 0.006800

E) 0.014500

Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.74 0.26 Stock A 0.17 0.19 Stock B 0.19 0.13 Stock C 0.29 0.01