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There is a 20 percent probability the economy will boom; a 20 percent probability of a...

There is a 20 percent probability the economy will boom; a 20 percent probability of a recesion and otherwise, it will be normal. The Smith Company stock is expected to return 12 percent in a boom, 8 percent in a normal economy and -3 percent in a recession. The Johnson Company stock is expected to return 15 percent in a boom, 4 percent in a normal economy and -3 percent otherwise. What is the standard deviation of a portfolio that is invested 40 percent in the Smith Company stock and 60 percent in the Johnson Company stock?

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jeff jeffy answered 1 year ago
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