What is the variance on this stock? State of Economy Boom Normal Probability of State of Economy .35 .65 Rate of Return if State Occurs 21% 7% .004200 .010682 .042042 .004459 .000000 A portfolio consists of the following securities. What is the portfolio weight of stock B? Stock A B Number of Shares 400 600 200 Price per Share $16 $27 $43 493 .479 .519 C.472 -537 You have a portfolio which is comprised of 60 percent of stock A and 40 percent of stock B. What is the expected rate of return on this portfolio? State of Economy Boom Normal Probability of State of Economy 30 70 Rate of Return if State Occurs Stock A Stock B 20% 14% 12% 8% 12.56 percent 10.38 percent 10.88 percent 12.91 percent 13.05 percent