Consider the following information: State of Econory Boom Bust State of Economy 9.62 0.38 Variance Stock A 0.09 9.20 Stock B 9.17 9.06 Stock C 0.35 -0.10 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 20% each in A and B and 60% in C? (Do not round Intermediate calculations. Ro the final answer to 6 decimal places.)
Consider the following information: State of Econory Boom Bust State of Economy 9.62 0.38 Variance Stock A 0.09 9.20 Stock B 9.17 9.06 Stock C 0.35 -0.10 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 20% each in A and B and 60% in C? (Do not round Intermediate calculations. Ro the final answer to 6 decimal places.)
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
Econcey
Boom
Bust
Probability of
State of Economy
Variance
9.62
9.38
Rate of Return if State Occirs
Stock A
8.09
Stock C
0.35
0.20
-0.10
Stock Il
8.17
0.06
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 20% each in A and B and 60% in C? (Do not round Intermediate calculations. Rounda
the final answer to 6 decimal places.)
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