The table below shows the expected rates of return for three stocks and their weights in some portfollo: Part 1 E - Attempt 1/10 for 10 pts. What is the expected portfolio return? Correct The portfolio retum in each state is the weighted average of the individual expected returns: =0.30.03+0.20.04+0.50.06=0.013 E(rp,norma)=wAE(rA normal )+wBE(rB, norma )+wCE(rC, normal ) =0.30.06+0.20.08+0.50.01=0.039 E(rpboom)=wAE(rA,boom)+wBE(rB,boom)+wCE(rC,boom)=0.30.11+0.20.1+0.50.09=0.098 The expected portolio return is the weighted average of the portfolio returns during a recession and a boom: =0.10.013+0.50.039+0.40.098 =0.0574 Part 2 - Attempt 1/10 for 10 pts. What is the standard deviation of the portiolio returns