Question
Stock S is expected to return 20% in a boom, 10% in a normal economy, and 5% in a recession. Stock T is expected to
Stock S is expected to return 20% in a boom, 10% in a normal economy, and 5% in a recession. Stock T is expected to return 15% in a boom, 12% in a normal economy, and 8% in a recession. The probability of a boom is 60% while the probability of a recession is 10%. Assume you invest $8,000 in stock S and $12,000 in stock T. What is the standard deviation of a portfolio in percentage? (Please do not round your intermediate calculations. Round only, if necessary, your final answer to two decimal places and enter it without the percentage (%) sign).
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