A portfolio is invested 40% in stock A, 30% in stock B, and 30% in stock C.
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A portfolio is invested 40% in stock A, 30% in stock B, and 30% in stock C. Assuming that the returns are normally distributed, what is the 68% probability range of returns for any given year?
State of Probability of Rate of Return if State Occurs
Economy State of Economy Stock A Stock B Stock C
Boom 0.10 0.05 0.16 0.23
Normal 0.70 0.08 0.09 0.11
Recession 0.20 0.15 -0.03 -0.25
| a. | 4.12% to 15.18% | |
| b. | 2.29% to 12.37% | |
| c. | 4.99% to 18.67% | |
| d. | 3.68% to 13.89% | |
| e. | 1.69% to 8.34% |
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A portfolio is invested 40 in stock A 30 in stock B and 30 in stock C Assuming that the returns are normally distributed what is the 68 probability range of returns for any given year The 68 probabili... View the full answer
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