Question
The table below shows the expected rates of return for three stocks and their weights in some portfolio: Stock A Stock B Stock C Portfolio
The table below shows the expected rates of return for three stocks and their weights in some portfolio:
| Stock A | Stock B | Stock C | ||
|---|---|---|---|---|
| Portfolio weights | 0.5 | 0.2 | 0.3 | |
| State | Probability | Expected returns: | Expected returns: | Expected returns: |
| Recession | 0.2 | 0.06 | 0.03 | 0.15 |
| Boom | 0.8 | 0.11 | 0.05 | 0.16 |
1. What is the expected portfolio return?
2. What is the standard deviation of the portfolio returns?
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Contemporary Financial Management
Authors: R. Charles Moyer, William J. Kretlow, James R. Mcguigan
7th Edition
0538877766, 9780538877763
