L$01$

$9.$ Returns and Standard Deviations Consider the following information:

LO $2$

$\backslash$table$[[\backslash$table$[[$State of$],[$Economy$]],\backslash$table$[[$Probability of$],[$State of Economy$]],$Rate of Return if State Occurs$],[$Stock $A,$Stock B$,$Stock C$,],[$Boom$,\mathrm{.}75,\mathrm{.}07,\mathrm{.}18,\mathrm{.}27],[$Bust$,\mathrm{.}25,\mathrm{.}12,-\mathrm{.}08,-\mathrm{.}21]]$

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 $C?$