State of Economy Boom Good Poor Bust of Economy 15 .45 .30 .10 Stock A .35 16 -.01 -.10 Stock B .40 .17 -.03 -.12 Stock C .28 .09 .01 -.09 . Your portfolio is invested 30 percent each in A and C, and 40 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.) -1. What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) -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.)
State of Economy Boom Good Poor Bust of Economy 15 .45 .30 .10 Stock A .35 16 -.01 -.10 Stock B .40 .17 -.03 -.12 Stock C .28 .09 .01 -.09 . Your portfolio is invested 30 percent each in A and C, and 40 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.) -1. What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) -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.)
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
Probability of State
of Economy
a. Expected return
b-1. Variance
b-2. Standard deviation
15
.45
.30
10
%
do
Rate of Return if State Occurs
%
Stock A
.35
.16
-.01
-.10
a. Your portfolio is invested 30 percent each in A and C, and 40 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.)
Stock B
.40
.17
-.03
-.12
Stock C
.28
.09
.01
-.09
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