Consider the following:
	Returns
Scenario	Probability	Auto	Gold	Portfolio (75% auto, 25% gold)
Recession	1/3	-8	+20	.75 (-8) + .25 (20) = -1.0%
Normal	1/3	+5	+3	.75 (5) + .25 (3) = +4.5%
Boom	1/3	+18	-20	.75 (18) + .25 (-20) = +8.5%
Expected Return
Auto	(-8+5+18)/3 = 5%
Gold	(+20+3-20)/3 = 1%
Portfolio	(-1+4.5+8.5)/3 = 4%
Variance
Auto	(169+0+169)/3 = 112.7 (std. 10.6%)
Gold	(361+4+441)/3 = 268.7 (std. 16.4%)
Portfolio	(25+.25 +20.25)/3 = 15.2 (stud 3.9%) 1)

1. Show expected return & variance of a 90% auto, 10% gold portfolio

2. Show expected return & variance of a 25% auto 75% gold portfolio

Answer rating: 100% (QA)

1 90 auto 10 gold portfolio Expected Return 09 5 Auto ... View the full answer