Question
. Returns and Variances: Consider the following information: Rate of Return if State Occurs State of Economy Prob. Of State of Economy Stock A Stock
. Returns and Variances: Consider the following information:
| Rate of Return if State Occurs | ||||
| State of Economy | Prob. Of State of Economy | Stock A | Stock B | Stock C |
| Boom | .75 | .06 | .15 | .25 |
| Bust | .25 | .11 | -.04 | -.08 |
a. What is the expected return on an equally weighted portfolio of these three stocks?
b. What is the varianceof a portfolio invested 20 percent each in A and B and 60 percent in C?
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Corporate Valuation A Guide For Managers And Investors
Authors: Phillip R. Daves, Michael C. Ehrhardt, Ron E. Shrieves
1st Edition
0324274289, 978-0324274288
