In: Finance
1.Returns and Standard Deviations Consider the following information:
State of Economy |
Probability of State of Economy |
Rate of Return If State Occurs |
||
Stock A |
Stock B |
Stock C |
||
Boom |
.10 |
.35 |
.45 |
.27 |
Good |
.60 |
.16 |
.10 |
.08 |
Poor |
.25 |
?.01 |
?.06 |
?.04 |
Bust |
.05 |
?.12 |
?.20 |
?.09 |
Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio?
What is the variance of this portfolio? The standard deviation?