State of Economy Boom Bust Probability of State of Economy 0.68 0.32 Rate of Return if State Occurs Stock A Stock B Stock C 0.31 0.11 0.15 0.15 0.19 0.11 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 30 percent each in A and B and 40 percent in C?

a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 30 percent each in A and B and 40 percent in C