Calculate the expected return, variance, and standard deviation for the stocks in the table below. Next, form an equally weighted portfolio of all three stocks and calculate its mean, variance, and standard deviation.
|
State of the Economy
|
Probability
|
Returns in Each State of the Economy
|
|
Cycli-Cal Inc
|
Home Grown Crop.
|
Pharma-Cel
|
|
Boom
|
20%
|
40%
|
20%
|
20%
|
|
Expansion
|
50%
|
10%
|
10%
|
40%
|
|
Recession
|
30%
|
-20%
|
-10%
|
-30%
|