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Consider the following information: State of Probability Economy of State Stock A Stock B Stock C Boom .45 Good .

Consider the following information:

State of Probability
Economy of State
Stock A Stock B Stock C
Boom .30 .30 .39 .45
Good .40 .15 .12 .20
Poor .12 .08 .06 .11
Bust .18 -.03 -.07 -.11

Requirement 1:
Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round your intermediate calculations.)

Requirement 2:
(a) What is the variance of this portfolio? (Do not round your intermediate calculations.)
HINT: It is best if you first calculate the return on the portfolio in all 4 states. You will need those numbers in the next part of the problem.

(b) What is the standard deviation? (Do not round your intermediate calculations.)
NOTE: The standard deviation is the square root of the variance. It tells us on average, how far away the return will be from the expected return.

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