Question: 8. Returns and Standard Deviations Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A

8. Returns and Standard Deviations Consider the following information: Rate of

8. Returns and Standard Deviations Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom .75 .06 .16 .33 Bust .25 .14 .02 -.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

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