Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Boom Bust .67 .33 Stock A .10 .14 Stock B .04 .20 Stock C .25 -.05 a. What is the expected return on an equally weighted portfolio of these three stocks? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. a. Expected return b. Variance of portfolio %
Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Boom Bust .67 .33 Stock A .10 .14 Stock B .04 .20 Stock C .25 -.05 a. What is the expected return on an equally weighted portfolio of these three stocks? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. a. Expected return b. Variance of portfolio %
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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Vijay
Transcribed Image Text:Consider the following information:
Rate of Return if State Occurs
State of Economy Probability of State of Economy
Boom
Bust
.67
.33
Stock A
.10
.14
Stock B
.04
.20
Stock C
.25
-.05
a. What is the expected return on an equally weighted portfolio of these three stocks?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C?
Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.
a. Expected return
b. Variance of portfolio
%
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