Question: 9. Returns and Standard Deviations Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A

9. Returns and Standard Deviations Consider the following information: State of

9. Returns and Standard Deviations Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C 20 Boom Good Poor Bust .35 .40 .05 .24 .09 .03 -.05 45 .10 -.10 -.25 .33 .15 -.05 -.09 a. Your portfolio is invested 30 percent each in A and C and 40 percent in B. What is the expected return of the portfolio? b. What is the variance of this portfolio? The standard deviation

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