What is the expected return of an equally weighted portfolio comprised of the following three stocks? State of Economy Probability of State of Economy Rate of Return if State Ocurs Stock B Stock A Stock C .07 .13 .22 .25 .19 .15 -.29 .13 .05 Boom Normal .72 Bust .03 -.14
What is the expected return of an equally weighted portfolio comprised of the following three stocks? State of Economy Probability of State of Economy Rate of Return if State Ocurs Stock B Stock A Stock C .07 .13 .22 .25 .19 .15 -.29 .13 .05 Boom Normal .72 Bust .03 -.14
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
Section: Chapter Questions
Problem 1PS
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What is the expected return of an equally weighted portfolio comprised of the following three stocks?
| State of Economy |
Probability of State of Economy |
Rate of Return if State Occurs |
||||||||
| Stock A | Stock B | Stock C | ||||||||
| Boom | .25 | .19 | .13 | .07 | ||||||
| Normal | .72 | .15 | .05 | .13 | ||||||
| Bust | .03 |
Transcribed Image Text:What is the expected return of an equally weighted portfolio comprised of the following three stocks?
State of
Economy
Probability of
State of Economy
Rate of Return
if State Ocurs
Stock B
Stock A
Stock C
.07
.13
.22
.25
.19
.15
-.29
.13
.05
Boom
Normal
.72
Bust
.03
-.14
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