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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? (Round your answer to 2 decimal places. (e.g., 32.16)) |
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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