Consider the following information: State of Economy Boom Good Poor Bust a. Probability of State- of Economy 15 .55 .25 .05 Rate of Return if State Occurs Stock A Stock B Stock C .30 .40 17 11 -.03 -.10 -.06 -.26 .31 .10 -.04 -.07 Your portfolio is invested 26 percent each in A and C, and 48 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
Consider the following information: State of Economy Boom Good Poor Bust a. Probability of State- of Economy 15 .55 .25 .05 Rate of Return if State Occurs Stock A Stock B Stock C .30 .40 17 11 -.03 -.10 -.06 -.26 .31 .10 -.04 -.07 Your portfolio is invested 26 percent each in A and C, and 48 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
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
Good
Poor
Bust
a.
Probability of State-
of Economy
a. Expected return
b-1. Variance
b-2. Standard deviation
15
.55
.25
.05
Rate of Return if State Occurs
Stock A
.30
.17
-.03
-.10
%
Stock B
.40
.11
Your portfolio is invested 26 percent each in A and C, and 48 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.)
%
-.06
-.26
Stock C
.31
.10
-.04
-.07
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