Problem 13-9 Returns and Variances (LO1, 2) Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Boom Bust 0.54 0.46 Stock A 0.12 0.15 Stock B 0.20 0.06 Stock C 0.38 -0.05 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 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Variance
Problem 13-9 Returns and Variances (LO1, 2)
Consider the following information:
| State of Economy |
Probability of State of Economy | Rate of Return if State Occurs | ||||||||||
| Stock A | Stock B | Stock C | ||||||||||
| Boom | 0.54 | 0.12 | 0.20 | 0.38 | ||||||||
| Bust | 0.46 | 0.15 | 0.06 | −0.05 | ||||||||
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 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.)
Problem 13-9 Returns and Variances (LO1, 2)
Consider the following information:
| State of Economy |
Probability of State of Economy | Rate of Return if State Occurs | ||||||||||
| Stock A | Stock B | Stock C | ||||||||||
| Boom | 0.54 | 0.12 | 0.20 | 0.38 | ||||||||
| Bust | 0.46 | 0.15 | 0.06 | −0.05 | ||||||||
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 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.)
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