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Your investment business specializes in supporting entertainers who are clowns (literally). The table below describes perspective returns on each clown. Expected returns for each clown:
Your investment business specializes in supporting entertainers who are clowns (literally). The table below describes perspective returns on each clown.
Expected returns for each clown:
State of Economy | Prob. of Occurrence | Ronald | Mr. Toot | Bozo | Puddles |
Boom | 0.25 | 0.4 | 0.3 | 0.5 | 0.5 |
Good | 0.15 | 0.3 | 0.25 | 0.4 | 0.45 |
Okay | 0.2 | 0.1 | 0.15 | 0.3 | 0.1 |
Poor | 0.2 | -0.2 | 0 | -0.3 | -0.4 |
Bad | 0.2 | -0.4 | 0.1 | -0.5 | -0.6 |
You have 15% of your portfolio behind Ronald, 20% with Mr. Toot, 20% in Bozo and the remainder with Puddles. What is the expected return of the portfolio, variance and standard deviation?
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