Question: Question 2 (15 marks) Part I Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock

Question 2 (15 marks) Part I Consider the following information: State

Question 2 (15 marks) Part I Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock J Stock K Stock L Boom 0.3 0.22 0.5 0.24 Good 0.45 0.14 0.4 0.18 Poor 0.25 0.05 -0.15 -0.08 Bust 0.05 -0.13 -0.35 -0.12 REQUIRED a) If your portfolio is invested 30 percent each in stock K and L and 40 percent in stock J. What is the expected return of portfolio? b) What is the variance and standard deviation of this portfolio?

Question 2 (15 marks) Part I Consider the following information: State of Economy Rate of Return if State Occurs Stock J Stock K Stock L Boom Good Poor Bust Probability of State of Economy 0.3 0.45 0.25 0.05 0.22 0.14 0.05 -0.13 0.5 0.4 -0.15 -0.35 0.24 0.18 -0.08 -0.12 REQUIRED a) If your portfolio is invested 30 percent each in stock K and L and 40 percent in stock J. What is the expected return of portfolio? b) What is the variance and standard deviation of this portfolio

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