Question: PLEASE SHOW STEP BY STEP SOLUTION! IM A NOVICE AT THIS! DO NOT SKIP ANY STEPS 18. XYZ Investment Corporation is considering a portfolio with

PLEASE SHOW STEP BY STEP SOLUTION! IM A NOVICE AT THIS! DO NOT SKIP ANY STEPS

PLEASE SHOW STEP BY STEP SOLUTION! IM A NOVICE AT THIS! DO

NOT SKIP ANY STEPS 18. XYZ Investment Corporation is considering a portfolio

18. XYZ Investment Corporation is considering a portfolio with 70% weighting in a cyclical stock and 30% weighting in a countercyclical stock. It is expected that there will be three economic states; Good, Average and Bad, each with equal probabilities of occurrence. The cyclical stock is expected to have returns of 25%, 5% and 1% in Good, Average and Bad economies respectively. The countercyclical stock is expected to have returns of -8%, 2% and 14% in Good, Average and Bad economies respectively. Given this information, calculate portfolio variance. A. 0.00451 B. 0.00351 C. 0.00251 D. 0.00151

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