20) please answwer the question correctly

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
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20) please answwer the question correctly 

Consider the following information:
State of
Economy
Rate of Return if State Occurs
Probability of State
of Economy
0.54
0.46
Stock A
Stock B
Stock C
0.12
0.15
0.20
0.06
Вoom
0.38
Bust
-0.05
a. What is the expected return on an equally weighted portfolio
Round the final answer to 2 decimal places.)
these three stocks? (Do not round intermediate calculations.
Expected return
45.16 * %
b. What is the variance of a portfolio invested 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the
final answer to 6 decimal places.)
Variance
Transcribed Image Text:Consider the following information: State of Economy Rate of Return if State Occurs Probability of State of Economy 0.54 0.46 Stock A Stock B Stock C 0.12 0.15 0.20 0.06 Вoom 0.38 Bust -0.05 a. What is the expected return on an equally weighted portfolio Round the final answer to 2 decimal places.) these three stocks? (Do not round intermediate calculations. Expected return 45.16 * % b. What is the variance of a portfolio invested 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance
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