Question: You have a portfolio that is comprised of 40% of Stock A and 60% of Stock B. What is the variance of the portfolio? State

You have a portfolio that is comprised of 40% of Stock A and 60% of Stock B. What is the variance of the portfolio?

State of the Economy	Probability	E(R_A)		E(R_B)
		40	%	60	%
Normal	.7	12	%	14	%
Recession	.3	−7	%	−10	%

Calculate fully diluted shares using the information below ($ in millions, except per share data; shares in millions) Assumptions Current share price $25 Basic shares outstanding 210 Exercisable options 20 Weighted average exercise price $40 The firm will use the option proceeds to repurchase the stock Note: input your answer in millions

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