Problem 1portfolio expected returnnbsp you own a portfolio

Reference no: EM13380752

Problem #1

Portfolio Expected Return. You own a portfolio that has $1,500 invested in Stock A and $2,600 invested in Stock B. If the expected returns on these stocks are 10 percent and 16 percent, respectively, what is expected return on the portfolio?

Problem #2

Calculating Expected Return. Based on the following information, calculate the expected return.

Stare of Economy Probability of State of Economy Rate of Return if State Occurs

Recession .25 -.09

Normal .45 .11

Boom .30 .30

Problem #3

Returns and Standard Deviations. Consider the following information:

State of Probability of Rate of Return if Occurs

Economy State of Economy Stock A Stock B Stock C

Boom .15 .35 .45 .33

Good .45 .12 .10 .17

Poor .35 .01 .02 -.05

Bust .05 -.11 -.25 -.09

Your portfolio is invested 30 percent each in A and C and 40 percent in B. What is the expected return of the portfolio?
What is the variance of this portfolio? The standard deviation?

Reference no: EM13380752

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