Problem 11-9 Returns and Standard Deviations (LO2, CFA5)

Consider the following information:

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B	Stock C
Boom	.20	.20	.33	.29
Good	.30	.15	.12	.13
Poor	.20	.01	.09	.06
Bust	.30	.21	.26	.13

a. Your portfolio is invested 30 percent each in Stocks A and C and 40 percent in Stock B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

b-2. What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)