Expected return and standard deviation.

Use the following information to answer the questions.

State of Economy		Probability of State		Return on Asset J in State		Return on Asset K in State		Return on Asset L in State
Boom		0.29		0.070		0.230		0.3
Growth		0.37		0.070		0.130		0.190
Stagnant		0.25		0.070		0.040		0.090
Recession		0.09		0.070		0.050		0.200

a. What is the expected return of each asset?

b. What is the variance and the standard deviation of each asset?

c. What is the expected return of a portfolio with

88 %

in asset J,

4545 %

in asset K, and

4747 %

in asset L?

d. What is the portfolio's variance and standard deviation using the same asset weights from part

(c )?

a. What is the expected return of asset J?

_____

(Round to four decimal places.)

What is the expected return of asset K?

-------

(Round to four decimal places.)

What is the expected return of asset L?

---------

(Round to four decimal places.)

b. What is the variance of asset J?

--------

(Round to four decimal places.)

What is the variance of asset K?

---------

(Round to four decimal places.)

What is the variance of asset L?

--------

(Round to four decimal places.)

What is the standard deviation of asset J?

------

(Round to four decimal places.)

What is the standard deviation of asset K?

------

(Round to four decimal places.)

What is the standard deviation of asset L?

-------

(Round to four decimal places.)

d. What is the portfolio's variance using the same asset weights from part

(c )____

(Round to four decimal places.

What is the portfolio's standard using the same asset weights from part

(c )?