Rate of Return if State Occurs Probability of State- State of Economy of Economy Stock A Stock B Stock C Boom 15 .35 .45 .25 Good .60 .19 .16 10 Poor .20 -.03 -.06 7.05 Bust .05 -13 -31 -.08 a. Your portfolio is invested 28 percent each in A and C, and 44 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.) a. Expected return b-1. Variance b-2. Standard deviation 12.79 % 0.02050 14.32 %
Rate of Return if State Occurs Probability of State- State of Economy of Economy Stock A Stock B Stock C Boom 15 .35 .45 .25 Good .60 .19 .16 10 Poor .20 -.03 -.06 7.05 Bust .05 -13 -31 -.08 a. Your portfolio is invested 28 percent each in A and C, and 44 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.) a. Expected return b-1. Variance b-2. Standard deviation 12.79 % 0.02050 14.32 %
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:Rate of Return if State Occurs
Probability of State-
State of Economy
of Economy
Stock A
Stock B
Stock C
Boom
15
.35
.45
.25
Good
.60
.19
.16
10
Poor
.20
-.03
-.06
7.05
Bust
.05
-13
-31
-.08
a.
Your portfolio is invested 28 percent each in A and C, and 44 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.)
a. Expected return
b-1. Variance
b-2. Standard deviation
12.79 %
0.02050
14.32 %
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