In: Finance
Consider the following information: |
Rate of Return if State Occurs | ||||
State of Economy | Probability
of State of Economy |
Stock A | Stock B | Stock C |
Boom | 0.62 | 0.07 | 0.27 | 0.17 |
Bust | 0.38 | 0.17 | 0.15 | 0.01 |
Requirement 1: |
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.) |
14.72% 17.22% 26.75% 29.52% 8.99% |
Requirement 2: |
What is the variance of a portfolio invested 30 percent each in A and B and 40 percent in C? (Do not round your intermediate calculations.) |
0.009154 0.008854 0.006654 0.004654 0.001154 |