Question: Market Condition Probability Return on Return on Return on Return on Stock A Stock B Stock C Stock D Growth 30% -20% 50% 60 10%

Market Condition

Probability

Return on

Return on

Return on

Return on

Stock A

Stock B

Stock C

Stock D

Growth

30%

-20%

50%

60

10%

Normal

40%

30%

80%

0

10%

Recession

30%

80%

10%

-20

10%

  1. Calculate the portfolios expected return and standard deviation if you invest 30% in Stock A, 30% in Stock B, 30% in Stock C and 10% in Stock D.
  1. In order to achieve a portfolio with zero standard deviation, calculate the amount of investment weights on Stock A and Stock B.

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