What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40 percent in stock T? Probability of State of Economy State of Economy Returns if State Occurs Stock T Stock S 17% Boom Normal 20% 7% 80% 13% 10%

What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40 percent in stock T? Probability of State of Economy State of Economy Returns if State Occurs Stock T Stock S 17% Boom Normal 20% 7% 80% 13% 10%

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

> X C|®| D
Note: Show your work.
What is the variance of the returns on a portfolio that is invested 60 percent in stock S and
40 percent in stock T?
Probability of State
of Economy
State of Economy
Returns if State Occurs
Stock S
Stock T
Boom
Normal
20%
17%
7%
10%
80%
13%

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