Rate of Return if State Occurs
State of Economy Probability of
State of Economy Stock A Stock B Stock C
Boom 0.74 0.29 0.09 0.11
Bust 0.26 0.17 0.05 0.15
Requirement 1:
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.)
(Click to select)
15.29%
17.79%
27.32%
30.09%
9.56%
Requirement 2:
What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round your intermediate)