1. Consider the following information on three stocks in four possible future states of the economy: (6...

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Finance

1. Consider the following information on three stocks infour possible future states of theeconomy:                                                                                               (6 marks total)
Rate of return if state occurs
State of economy
Probability of state of economy
Stock A
Stock B
Stock C
Boom
0.4
0.35
0.45
0.38
Good
0.3
0.15
0.20
0.12
Poor
0.2
0.05
-0.10
-0.05
Bust
0.1
0.00
-0.30
-0.10
a.   Your portfoliois invested 50% in A, 20% in B, and 30% in C. What is the expectedreturn of yourportfolio?
b.   What is thevariance of this portfolio?
c.   What is thestandard deviation of thisportfolio?                              (1 mark)

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1. Consider the following information on three stocks infour possible future states of theeconomy: (6 marks total)Rate of return if state occursState of economyProbability of state of economyStock AStock BStock CBoom0.40.350.450.38Good0.30.150.200.12Poor0.20.05-0.10-0.05Bust0.10.00-0.30-0.10a. Your portfoliois invested 50% in A, 20% in B, and 30% in C. What is the expectedreturn of yourportfolio? b. What is thevariance of this portfolio? c. What is thestandard deviation of thisportfolio? (1 mark)

		Rate of return if state occurs
State of economy	Probability of state of economy	Stock A	Stock B	Stock C
Boom	0.4	0.35	0.45	0.38
Good	0.3	0.15	0.20	0.12
Poor	0.2	0.05	-0.10	-0.05
Bust	0.1	0.00	-0.30	-0.10