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STATE OF ECONOMY PROBABILITY OF STATE OF ECONOMY RETURNS STOCK A RETURNS STOCK B RETURNS STOCK C Boom 5% 17% 6% 22% Normal 55% 8%
STATE OF ECONOMY | PROBABILITY OF STATE OF ECONOMY | RETURNS STOCK A | RETURNS STOCK B | RETURNS STOCK C |
Boom | 5% | 17% | 6% | 22% |
Normal | 55% | 8% | 10% | 15% |
Recession | 40% | -3% | 19% | -25% |
What is the expected return and standard deviation of a portfolio that is invested in stocks A, B, and C? Twenty five percent of the portfolio is invested in stock A, 40 percent is invested in stock C, and the remaining is invested in stock B.
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