Question: s. Consider the following information: STATE BOOM BUST PROBABILITY .6 A. 25% -10% -5% 30% 1) What is the expected return, variance and standard deviation

 s. Consider the following information: STATE BOOM BUST PROBABILITY .6 A.

s. Consider the following information: STATE BOOM BUST PROBABILITY .6 A. 25% -10% -5% 30% 1) What is the expected return, variance and standard deviation for asset A? (10) 2) What are expected returm, variance and standard deviation for asset B? (10') If you invest 50% of your money in Asset A, what is the expected return for the portfolio in a boom period? (5') 3) 4) Following 3), what is the expected return for the portfolio as a whole (considering both states of the economy)? (5) 5) What are variance and standard deviation of the portfolio? (5") Page 3 of 4

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