Rate of return if state occurs state of probability of


Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .65 .11 .19 .37 Bust .35 .12 .06 −.05 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 16 percent each in A and B and 68 percent in C?

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Financial Management: Rate of return if state occurs state of probability of
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