Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of
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Question:
Consider the following information: |
Rate of Return If State Occurs | ||||||||||||
State of | Probability of | |||||||||||
Economy | State of Economy | Stock A | Stock B | Stock C | ||||||||
Boom | .56 | .13 | .21 | .39 | ||||||||
Bust | .44 | .15 | .05 | −.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?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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