b) Consider the following information: Rate of Return if State Occurs State of Economy Boom Probability...

   

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b) Consider the following information: Rate of Return if State Occurs State of Economy Boom Probability of State of Economy Stock A Stock B Stock C 0.65 0.07 0.15 0.33 Bust 0.35 0.13 0.03 - 0.06 a) What is the expected return on an equally weighted portfolio of these three stocks? b) What is the variance of a portfolio invested 15% each in A and B and 70% in C? b) Consider the following information: Rate of Return if State Occurs State of Economy Boom Probability of State of Economy Stock A Stock B Stock C 0.65 0.07 0.15 0.33 Bust 0.35 0.13 0.03 - 0.06 a) What is the expected return on an equally weighted portfolio of these three stocks? b) What is the variance of a portfolio invested 15% each in A and B and 70% in C?

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a To calculate the expected return on an equally weighted portfolio of these three stocks we need to find the weighted average of the individual stock ... View the full answer