STATE OF Economy PROBABILITY RATE OF RETURN IF STATE OCCUR -------------------- --------------------- A B C ------------------------------------------------------------------------------------------------- Boom .15 .24 .43 .36 Good .45 .11 .19 .15 Poor .35 .03 -.16 -.04 Bust .05 -.09 -.29 -.08 ______________________________________________________________________________ a. Your portfolio is invested 35 percent in A and C, and 30 percent in B. What is the expected return of the portfolio? b. What is the variance of the portfolio? c. What is the standard deviation of the portfolio?
STATE OF Economy PROBABILITY RATE OF RETURN IF STATE OCCUR
-------------------- --------------------- A B C
-------------------------------------------------------------------------------------------------
Boom .15 .24 .43 .36
Good .45 .11 .19 .15
Poor .35 .03 -.16 -.04
Bust .05 -.09 -.29 -.08
______________________________________________________________________________
a. Your portfolio is invested 35 percent in A and C, and 30 percent in B. What is the expected return of the portfolio?
b. What is the variance of the portfolio?
c. What is the standard deviation of the portfolio?
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