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You bought shares of stock from Tesla, Target, and Toyota. You feel like every year in the future will be randomly either spectacular or depressing.

You bought shares of stock from Tesla, Target, and Toyota. You feel like every year in the future will be randomly either "spectacular" or "depressing".

Rate of Return if State Occurs
State of Economy Probability of State of Economy Stock of Tesla Stock of Target Stock of Toyota
Spectacular 0.74 0.25 0.33 0.27
Depressing 0.26 0.13 0.11 0.09

Requirement 1:

If you bought an equally weighted portfolio of Tesla, Target, and Toyota shares, what return would you expect to receive every year on your stock investment?

Requirement 2:

What do you expect the variance of your portfolio returns to be, if you invested 20 percent of your money in Tesla's shares, same proportion in Target's shares, and 60 percent in Toyota's shares?

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