Question: 3 expected return? How do you interpret your answer? Returns and Standard Deviations. Consider the following information: 9. State of Economy Probability of State of

3 expected return? How do you interpret your answer? Returns and Standard Deviations. Consider the following information: 9. State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Stock C Boom Bust 60 .40 .15 .03 .02 .16 34 -.08 What is the expected return on an equally weighted portfolio of these three stocks? What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? a. b

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