Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Economy Stock A Stock B Stock C Boom 15 40 .50 .30 Good .60 16 10 -.05 .09 Poor .20 -.02 -.03 Bust .05 -18 -.25 -11

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
State of
Probability of
State of
Economy
Economy
Stock A
Stock B
Stock C
Boom
.15
.40
.50
.30
Good
.60
16
10
.09
Poor
.20
-.02
-.05
-.03
Bust
.05
-18
-.25
-11
Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is
the expected return of the portfolio? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b-1. What is the variance of this portfolio? (Do not round intermediate calculations and
round your answer to 5 decimal places, e.g., 16161.)
b-2. What is the standard deviation? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a.
%
a.
Expected return
b-1. Variance
b-2. Standard deviation
10 of 15
Next >
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Transcribed Image Text:Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Economy Stock A Stock B Stock C Boom .15 .40 .50 .30 Good .60 16 10 .09 Poor .20 -.02 -.05 -.03 Bust .05 -18 -.25 -11 Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 16161.) b-2. What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. % a. Expected return b-1. Variance b-2. Standard deviation 10 of 15 Next > Prev 9,779 28 MacBook Air
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