Question: State Probability Return on Security A Return on Security B Boom .6 13% 20% Bust .4 -4.5% 3% What is the expected return on Security

State

Probability

Return on Security A

Return on Security B

Boom

.6

13%

20%

Bust

.4

-4.5%

3%

What is the expected return on Security A?

A. 4.25%

B. 9.6%

C. 6.0%

D. 12.1 %

E. -1.5

What is the standard deviation of Security A

A. 8.6 %

B. 0.7%

C. 4.2%

D. 8.8%

What is the expected return on Security B

A. 8.8%

B. 9.7%

C. 7.2%

D. 13.2%

E. 11.5%

What is the expected return on a portfolio composed of 25% in Security B

A. 11.9%

B. 9.7%

C. 6.1%

D. 14.5%

E. 11.4%

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