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Consider the following information: Rate of Return if State Occurs State of Probability of State Economy...

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Finance

Consider the following information: Rate of Return if StateOccurs State of Probability of State Economy of Economy Stock AStock B Stock C Boom .69 .12 .06 .27 Bust .31 .16 .22 –.07Required: (a) What is the expected return on an equally weightedportfolio of these three stocks? (Do not round intermediatecalculations. Enter your answer as a percentage rounded to 2decimal places (e.g., 32.16).) Expected return % (b) What is thevariance of a portfolio invested 24 percent each in A and B and 52percent in C? (Do not round intermediate calculations. Round youranswer to 5 decimal places (e.g., 32.16161).) Variance of aportfolio

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Transcribed Image Text

Consider the following information: Rate of Return if StateOccurs State of Probability of State Economy of Economy Stock AStock B Stock C Boom .69 .12 .06 .27 Bust .31 .16 .22 –.07Required: (a) What is the expected return on an equally weightedportfolio of these three stocks? (Do not round intermediatecalculations. Enter your answer as a percentage rounded to 2decimal places (e.g., 32.16).) Expected return % (b) What is thevariance of a portfolio invested 24 percent each in A and B and 52percent in C? (Do not round intermediate calculations. Round youranswer to 5 decimal places (e.g., 32.16161).) Variance of aportfolio

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