Question: Consider the following information: a. Your portfolio is invested 40 percent each in A and C, and 20 percent in B. What is the expected

Consider the following information:

a. Your portfolio is invested 40 percent each in A and C, and 20 percent in B. What is the expected return of the portfolio?

b. What is the variance of this portfolio? The standard deviation?

PROBABILITY OF STATE OF ECONOMY RATE OF RETURN IF STATE OCCURS STATE OF ECONOMY STOCK A STOCK B STOCK C Boom Good Poor Bust .15 45 35 30 12 .01 .06 .45 .10 .15 .30 -33 .15 .05 .09

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