View the step-by-step solution to:

# Consider the following information: Probability Stock A Stock B Stock C Boom .

Consider the following information:

Probability 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."

The way to answer this question is ... View the full answer

Consider the following information:
Probability 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:

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents