Consider the following information: Requirement 1: Your portfolio is invested 32

Question

Consider the following information: Requirement 1: Your portfolio is invested 32 percent each in A and C and 36 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).) Expected return of the portfolio % Requirement 2: What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).) Variance of the portfolio 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).) Standard deviation %

Explanation / Answer

Requirement 1.

      state of economy Probability Weighted return of stock (Probability * return of stock)   

A B C   

Boom 0.20 0.0734 0.0934 0.0694

Good 0.40 0.0548 0.0468 0.0748

Poor 0.30 0.0081 0.0111 -0.0276

Bust 0.10 -0.0127 - 0.0267 -0.0107

  

Expected return on Portfolio 12.36% 12.46% 10.59%

  

  

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