Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of
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Question:
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 | .60 | .08 | .16 | .34 | ||||||||
Bust | .40 | .18 | .08 | −.07 | ||||||||
a. | What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Expected return | % |
b. | What is the variance of a portfolio invested 18 percent each in A and B and 64 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.) |
Variance |
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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