Problem 13-9 Returns and Variances [LO1] Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom 0.65 0.07 0.15...



Problem 13-9 Returns and Variances [LO1]









Consider the following information:















































Rate of Return if State Occurs

State of

Probability of


Economy

State of Economy

Stock A

Stock B

Stock C

Boom

0.65

0.07

0.15

0.33

Bust


0.35



0.13



0.03


?

0.06











a.


What is the expected return on an equally weighted portfolio of these three stocks?
(Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))











Expected return

%









b.


What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?
(Do not round intermediate calculations and
round your answer to 6 decimal places. (e.g., 32.161616))










Variance
Nov 11, 2021
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