4. Consider the following information: Probability of State of Rate of return if State occurs State...

 

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4. Consider the following information: Probability of State of Rate of return if State occurs State of economy Stock A Stock B Stock C economy Boom 0.20 0.25 0.25 0.45 Good 0.50 0.10 0.13 0.11 Poor 0.15 0.03 0.05 0.05 Bust 0.15 -0.04 -0.09 -0.06 a) Calculate the expected rate of return and standard deviation for each stock. b) Your portfolio is invested 35% in Stock A, 35% in Stock C, and 30% in Stock B. What are the expected rate of return and the standard deviation of your portfolio? 4. Consider the following information: Probability of State of Rate of return if State occurs State of economy Stock A Stock B Stock C economy Boom 0.20 0.25 0.25 0.45 Good 0.50 0.10 0.13 0.11 Poor 0.15 0.03 0.05 0.05 Bust 0.15 -0.04 -0.09 -0.06 a) Calculate the expected rate of return and standard deviation for each stock. b) Your portfolio is invested 35% in Stock A, 35% in Stock C, and 30% in Stock B. What are the expected rate of return and the standard deviation of your portfolio?