Problem 11-10 Returns and Standard Deviations [LO 1, 2]

Consider the following information:

				Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy			Stock A	Stock B	Stock C
Boom		.17		.358	.458	.338
Good		.43		.128	.108	.178
Poor		.33		.018	.028	.062
Bust		.07		.118	.258	.098

Requirement 1:

Your portfolio is invested 29 percent each in A and C and 42 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Expected return of the portfolio

%

Requirement 2:

(a)	What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).)

Variance of the portfolio

(b)	What is the standard deviation of this portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Standard deviation

%