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state of economy probability of state of economy rate of return if state occurs ) stock A rate of return if state occurs ) stock
| state of economy | probability of state of economy | rate of return if state occurs ) stock A | rate of return if state occurs ) stock B | rate of return if state occurs ) stock C |
| boom | .15 | .30 | .45 | .33 |
| good | .45 | .12 | .10 | .15 |
| poor | .35 | .01 | -.15 | -.05 |
| bust | .05 | -.06 | -.30 | -.09 |
1. Your portfolio is invested 40 percent each in A and C, and 20 percent in B. What is the expected return of the portfolio?
2. What is the variance of this portfolio? The standard deviation?
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