State Prob. of State A B C Boom 20% 0.27 0.22 0.16 Good 45% 0.16 0.09 0.07 Poor 25% 0.03 0 0.03 Bust 10% -0.08 -0.04 -0.02

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
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Consider the following information on Stocks A, B, C and
their returns (in decimals) in each state:
State
Prob. of State
A
B
C
Boom
20%
0.27
0.22
0.16
Good
45%
0.16
0.09
0.07
Poor
25%
0.03
0
0.03
Bust
10%
-0.08
-0.04
-0.02
If your portfolio is invested 25% in A, 40% in B, and 35% in
C, what is the standard deviation of the portfolio in percent?
Answer to two decimals, carry intermediate calcs. to at least
four decimals.
Transcribed Image Text:Consider the following information on Stocks A, B, C and their returns (in decimals) in each state: State Prob. of State A B C Boom 20% 0.27 0.22 0.16 Good 45% 0.16 0.09 0.07 Poor 25% 0.03 0 0.03 Bust 10% -0.08 -0.04 -0.02 If your portfolio is invested 25% in A, 40% in B, and 35% in C, what is the standard deviation of the portfolio in percent? Answer to two decimals, carry intermediate calcs. to at least four decimals.
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