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Consider the following information: Rate of return if state occurs State of Economy Probability of state of economy Stock A Stock B Stock C
Boom .71 .09 .03 .39
Bust .29 .28 .34 -.19
a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return = 16.23 %
b. What is the variance of a portfolio invested 26 percent each in A and B and 48 percent in C? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)
Variance of a portfolio =
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