# Rate of Return if State Occurs

**Question description**

Consider the following information: |

Rate of Return if State Occurs | |||||||

State of | Probability of | ||||||

Economy | State of Economy | Stock A | Stock B | Stock C | |||

Boom | 0.15 | 0.35 | 0.45 | 0.27 | |||

Good | 0.55 | 0.16 | 0.10 | 0.08 | |||

Poor | 0.25 | − | 0.01 | − | 0.06 | − | 0.04 |

Bust | 0.05 | − | 0.12 | − | 0.20 | − | 0.09 |

a. | Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? |

Expected return | % |

b-1 | What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161)) |

Variance |

b-2 | What is the standard deviation? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) |

Standard deviation | % |

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