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Consider the following information: Probability of State of Economy 0.54 0.46 State of Rate of Return if State Occurs Stock B 0.20 Stock C Economy Вoom Bust Stock A 0.12 0.38 -0.05 0.15 0.06 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 0.08 %

Consider the following information: Probability of State of Economy 0.54 0.46 State of Rate of Return if State Occurs Stock B 0.20 Stock C Economy Вoom Bust Stock A 0.12 0.38 -0.05 0.15 0.06 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 0.08 %

Essentials Of Investments
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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Consider the following information: Rate of Return if State Occurs Probability of State of Economy 0.54 State of Economy Stock A Stock B Stock C 0.12 0.15 0.38 -0.05 Boom 0.20 Bust 0.46 0.06 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 0.08 * % 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 1.67 *
Transcribed Image Text:Consider the following information: Rate of Return if State Occurs Probability of State of Economy 0.54 State of Economy Stock A Stock B Stock C 0.12 0.15 0.38 -0.05 Boom 0.20 Bust 0.46 0.06 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 0.08 * % 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 1.67 *
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