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Consider the following information: Rate of return if state occurs. State of economy Boom Bust Probability of state of economy 0.54 0.46 Stock A 0.12 Stock B 0.20 Stock C 0.38 0.14 0.04 -0.07 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 % b. What is the variance of a portfolio invested 18 percent each in A and B, and 64 percent in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance

Consider the following information: Rate of return if state occurs. State of economy Boom Bust Probability of state of economy 0.54 0.46 Stock A 0.12 Stock B 0.20 Stock C 0.38 0.14 0.04 -0.07 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 % b. What is the variance of a portfolio invested 18 percent each in A and B, and 64 percent in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance

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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provide A and B both answer with explanation

Consider the following information: Rate of return if state occurs. State of economy Boom Bust Probability of state of economy 0.54 0.46 Stock A 0.12 Stock B 0.20 Stock C 0.38 0.14 0.04 -0.07 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 % b. What is the variance of a portfolio invested 18 percent each in A and B, and 64 percent in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance
Transcribed Image Text:Consider the following information: Rate of return if state occurs. State of economy Boom Bust Probability of state of economy 0.54 0.46 Stock A 0.12 Stock B 0.20 Stock C 0.38 0.14 0.04 -0.07 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 % b. What is the variance of a portfolio invested 18 percent each in A and B, and 64 percent in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance
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