Your portfolio is invested 31 percent each in A and C and 38 percent in B. What

Question

Your portfolio is invested 31 percent each in A and C and 38 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).)

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

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).)

Explanation / Answer

Answer 1: Stock A = (0.20*0.361)+(0.40*0.131)+(0.30*0.021)+(0.10*0.121) =0.1430

Stock B: (0.20*0.461)+(0.40*0.111)+(0.30*0.031)+(0.10*0.261) = 0.1720

Stock C: (0.20*0.341)+(0.40*0.181)+(0.30*0.067)+(0.10*0.101) = 0.1728

Expected return on portfolio: (0.31*0.1430)+(0.31*0.1720)+(0.38*0.1728) = 16.26%

Answer 2 (a) : Variance of portfolio: (0.31*0.1186)+(0.31*0.1580)+(0.38*0.0977) = 0.1229

Answer 2 (b) : Standard Deviation of portfolio: Sqrt (0.1229) = 0.3505

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