Consider the following information: Requirement 1: Your portfolio is invested 28

Question

Consider the following information: Requirement 1: Your portfolio is invested 28 percent each in A and C and 44 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).) 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).) 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

Calculation of Average Return-

A- Expected Return= Sum of (Return*Weight)

Expected Return= 9.99%

Portfolio Varriance = 193.321

Standard Deviation= Underroot 193.321 =13.90

State Probablity Return(A) Return(B) Return(C) Return(A)*Prob. Return(B)*Prob. Return(C)*Prob. Boom 0.17 36.4 46.4 34.4 6.188 7.888 5.848 Good 0.43 13.4 11.4 18.4 5.762 4.902 7.912 Poor 0.33 2.4 3.4 -8.9 0.792 1.122 -2.937 Bust 0.07 -12.4 -2.64 -10.4 -0.868 -0.1848 -0.728 Avg.Return 11.87% 13.73% 10.10%

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