20) please answwer the question correctly Consider the following information:State ofEconomyRate of Return if State OccursProbability of Stateof Economy0.540.46Stock AStock BStock C0.120.150.200.06Вoom0.38Bust-0.05a. What is the expected return on an equally weighted portfolioRound the final answer to 2 decimal places.)these three stocks? (Do not round intermediate calculations.Expected return45.16 * %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 thefinal answer to 6 decimal places.)Variance

Expected return estimates the mean, or anticipated worth, of the likelihood appropriation of…

Answered: 20) please answwer the question…

Business

Finance

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

Problem 1PS

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

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

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