Consider the following information State of Probability of Economy State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom Bust 0.62 0.38 0.09 0.20 0.17 0.06 0.35 -0.10 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculati Round the final answer to 2 decimal places.) Expected return % b. What is the variance of a portfolio invested 20% each in A and B and 60% in C? (Do not round intermediate calculations. the final answer to 6 decimal places.) Variance

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Consider the following information:
State of
Probability of
Economy
State of Economy
Boom
Bust
0.62
0.38
Rate of Return if State Occurs
Stock A
0.09
0.20
Stock B
0.17
0.06
Stock C
0.35
-0.10
6
a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations.
Round the final answer to 2 decimal places.)
Expected return
%
b. What is the variance of a portfolio invested 20% each in A and B and 60% in C? (Do not round intermediate calculations. Roun
the final answer to 6 decimal places.)
Variance
Transcribed Image Text:Consider the following information: State of Probability of Economy State of Economy Boom Bust 0.62 0.38 Rate of Return if State Occurs Stock A 0.09 0.20 Stock B 0.17 0.06 Stock C 0.35 -0.10 6 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return % b. What is the variance of a portfolio invested 20% each in A and B and 60% in C? (Do not round intermediate calculations. Roun the final answer to 6 decimal places.) Variance
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