Question
The following are possible states of the economy and the returns associated with stocks A and B in those states. State Probability Return on A
The following are possible states of the economy and the returns associated with stocks A and B in those states.
State Probability Return on A Return on B
Good 0.35 24% -30%
Normal 0.4 36% 18%
Bad 0.25 48% 6%
Calculate the expected return and the standard deviation of a portfolio comprised of stocks A and B. The weight in stock A is 60%
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Public Finance
Authors: Harvey S Rosen, Ted Gayer
9th International Edition
0071267883, 9780071267885
