Consider the following information: State of Economy Boom Bust Probability of State of Economy a. Expected return b. Variance .66 .34 Rate of Return if State Occurs 19.77 % 0.016872 Stock A .12 .20 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Stock B .21 .08 b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) Stock C .39 -.08
Consider the following information: State of Economy Boom Bust Probability of State of Economy a. Expected return b. Variance .66 .34 Rate of Return if State Occurs 19.77 % 0.016872 Stock A .12 .20 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Stock B .21 .08 b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) Stock C .39 -.08
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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Transcribed Image Text:Consider the following information:
State of Economy
Boom
Bust
Probability of State
of Economy
a. Expected return
b. Variance
.66
.34
19.77 X %
0.016872
Rate of Return if State Occurs
Stock A
.12
.20
Stock B
.21
a. What is the expected return on an equally weighted portfolio of these three stocks?
(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? (Do not round intermediate calculations and round your answer to 6
decimal places, e.g., .161616.)
.08
Stock C
.39
-.08
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