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

.56

.13

.21

.39

Bust

.44

.15

.05

−.06

a. What is the expected return on an equally weighted portfolio of these three stocks?

b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?

Answer rating: 100% (QA)

a Expected return on an equally weighted portfolio Expected Return 056 013 056 021 056 039 044 015 0... View the full answer