The returns of Railroad United (RIU) are listed below, along with thereturns on Major Application of Technology (MAT).State of economy Prob. of state of economy▸RIUEconomy 1Economy 2Economy 3Economy 41. What is the expected return of a portfolio that is 50% in stock RIUand 50% in MAT?15%25%30%30%MAT-14%16%22%7%-9%11%15%5%2. What is the standard deviation of the portfolio that is 50% instock RIU and 50% in MAT?

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What is the standard deviation of the portfolio that is 50% in

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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Question

The returns of Railroad United (RIU) are listed below, along with the
returns on Major Application of Technology (MAT).
State of economy Prob. of state of economy
▸
RIU
Economy 1
Economy 2
Economy 3
Economy 4
1. What is the expected return of a portfolio that is 50% in stock RIU
and 50% in MAT?
15%
25%
30%
30%
MAT
-14%
16%
22%
7%
-9%
11%
15%
5%
2. What is the standard deviation of the portfolio that is 50% in
stock RIU and 50% in MAT?

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