Consider the following information: State of Probability of State of Economy 17

Question

Consider the following information: State of Probability of State of Economy 17 43 .33 .07 Rate of Return If State Occurs tock B S Stock C Boom Good Poor Bust Stock A 358 128 018 458 108 028 -.258 338 178 -.062 -.098 -,118 Your portfolio is invested 29 percent each in A and C and 42 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Variance What is the standard deviation of this portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation 11.24 %

Explanation / Answer

Expected return = 11.24%

Variance = 0.023568

standard dev = 15.35%

p(x) return p*x p*(x - mean)^2 0.17 39.42% 0.067014 0.013502115 0.43 13.41% 0.057663 0.000202912 0.33 -0.10% -0.00033 0.004241934 0.07 -17.10% -0.01197 0.005621177

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