In: Finance
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 | .75 | .08 | .17 | .24 | ||||||||||
Bust | .25 | .11 | − | .05 | − | .08 | ||||||||
a. |
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
b. | What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) |