Rate of Return if State Occurs State of Economy Boom Probability of State of Economy Stock A Bust .67 .33 .10 -24 Stock B .04 Stock C .35 .30 -.15 a. What is the expected return on an equally weighted portfolio of these three stocks? Note: 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? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. Answer is not complete. a. Expected return b. Variance of portfolio 15.21 %

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
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Rate of Return if State Occurs
State of Economy
Boom
Probability of State of Economy
Stock A
Bust
.67
.33
.10
-24
Stock B
.04
Stock C
.35
.30
-.15
a. What is the expected return on an equally weighted portfolio of these three stocks?
Note: 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?
Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.
Answer is not complete.
a. Expected return
b. Variance of portfolio
15.21
%
Transcribed Image Text:Rate of Return if State Occurs State of Economy Boom Probability of State of Economy Stock A Bust .67 .33 .10 -24 Stock B .04 Stock C .35 .30 -.15 a. What is the expected return on an equally weighted portfolio of these three stocks? Note: 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? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. Answer is not complete. a. Expected return b. Variance of portfolio 15.21 %
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