Problem 11-11 Given the following information, calculate the expected return and

Question

Problem 11-11

Given the following information, calculate the expected return and standard deviation for a portfolio that has 37 percent invested in Stock A, 34 percent in Stock B, and the balance in Stock C. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Returns

State of

Probability of

  Economy

State of Economy

Stock A

Stock B

Stock C

  Boom

.50

8

%

21

%

24

%

  Bust

.50

11

0

–11

  Expected return

%

  Standard deviation

%

Given the following information, calculate the expected return and standard deviation for a portfolio that has 37 percent invested in Stock A, 34 percent in Stock B, and the balance in Stock C. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

ANSWER:    

We are 95% confident that the actual mean difference between the appraised values and selling prices of all the houses sold in Grand Rapids is between -$3785 and $561.  

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