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State of Economy. Probability of State of Economy. Stock A. Stock B. Stock C Boom .60 .18 .04 .31 Bust .40 .03 .16 -.11 a.)

State of Economy. Probability of State of Economy. Stock A. Stock B. Stock C

Boom .60 .18 .04 .31

Bust .40 .03 .16 -.11

a.) What is the expected return on an equally weighted portfolio of these three stocks? Expected Return?

b.) What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? Variance of a portfolio?

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