State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C .58 .14 .42 .16 a. b. Boom Bust .22.40 .06-.05 What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)
State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C .58 .14 .42 .16 a. b. Boom Bust .22.40 .06-.05 What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)
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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Question
![Consider the following information:
State of Economy Probability of State of Economy Rate of Return if State Occurs
Stock A
Stock C
Boom
.14
Bust
.16
a.
b.
Stock B
.58
.42
.22.40
.06-.05
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round
intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bf644bf-2ebc-481d-a095-e107c6da4377%2Ff0ff119b-1ae3-4d8a-a2e7-1d848e0f5d28%2Fkrkiwvb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the following information:
State of Economy Probability of State of Economy Rate of Return if State Occurs
Stock A
Stock C
Boom
.14
Bust
.16
a.
b.
Stock B
.58
.42
.22.40
.06-.05
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round
intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)
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