What is the expected return on an equally weighted

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Returns and Standard Deviations [LO 1, 2]

Consider the following information:


Rate of Return if State Occurs
State of Probability of State
Economy of Economy Stock A Stock B Stock C
Boom .72               .10         .04         .40       
Bust .28               .29         .35         -.20       

Required:
(a)

What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Expected return %
(b)

What is the variance of a portfolio invested 27 percent each in A and B and 46 percent in C? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).)

  Variance of a portfolio   

Reference no: EM13568521

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