Problem
Given the following information, calculate the expected return and standard deviation for a portfolio that has 32 percent invested in Stock A, 31 percent in Stock B, and the balance in Stock C.
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Returns
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|
State of
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Probability of
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|
|
|
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Economy
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State of Economy
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Stock A
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Stock B
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Stock C
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Boom
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.40
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17%
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20%
|
23%
|
|
Bust
|
.60
|
18
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0
|
–18
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|
Expected return
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%
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|
Standard deviation
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%
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a) Calculation of Expected return on portfolio?
b) Calculation of Standard deviation of portfolio?