Problem $11-9$ Returns and Standard Deviations $[$LO $1,2]$

Consider the following information:

State of Economy Probability of State of Economy

Rate of Return if State Occurs

Stock A Stock B

Boom

$.68$

$11$

$.05$

Bust

$\mathrm{.}32$

$.15$

Stock C

$26$

$.06$

$\mathrm{.}21$

$$What is the expected return on an equally weighted portfolio of these three stocks?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

$$What is the variance of a portfolio invested $23$ percent each in A and B and $54$ percent in C$?$

Note: Do not round intermediate calculations and round your answer to $5$ decimal places, e$.$g$.,16161.$

$\%$

$$Expected return

$$Variance of portfolio

Problem $11-9$ Returns and Standard Deviations $[$LO $1,2]$

Consider the following information:

a$.$ What is the expected return on an equally weighted portfolio of these three stocks?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

b$.$ What is the variance of a portfolio invested $23$ percent each in A and B and $54$ percent in C $?$

Note: Do not round intermediate calculations and round your answer to $5$ decimal places, e$.$g$.,16161.$