Question: Exercise 6 Consider the following information: Economic condition Probability Boom 0.65 Bust 0.35 Stock A Return Stock B Return Stock C Return 6% 16% 33%

Exercise 6 Consider the following information: Economic condition Probability Boom 0.65

Exercise 6 Consider the following information: Economic condition Probability Boom 0.65 Bust 0.35 Stock A Return Stock B Return Stock C Return 6% 16% 33% 14% 2% -6% What is the expected return of a portfolio with equal weights in these three stocks? What is the variance of a portfolio invested 20% each in A and B, and 60% in C

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