You have a portfolio which is comprised of 65 percent of stock A and 35 percent of stock B.

What is the expected return on this portfolio in a recession?

State of Probability of State Rate of Return if State Occurs

Economy of Economy Stock A Stock B

Boom .15 7% 18%

Normal .60 13% 11%

Recession .25 19% -16%

a.		10.85%
b.		12.3%
c.		10.70%
d.		none

2. You have a portfolio which is comprised of 65 percent of stock A and 35 percent of stock B.

What is the expected return on this portfolio?

State of Probability of State Rate of Return if State Occurs

Economy of Economy Stock A Stock B

Boom .15 7% 18%

Normal .60 13% 11%

Recession .25 19% -16%

	a.	10.85%
b.		12.3%
c.		10.70%
d.		none

3. Please use the information given in the previous question (#3).

You have a portfolio which is comprised of 65 percent of stock A and 35 percent of stock B.

What is the standard deviation of this portfolio?

a.		4.02%
b.		2.33%
c.		cannot be determined with the given info
d.		none

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