Expected return and standard deviation.

Use the following information to answer the questions.

State of Economy		Probability of State		Return on Asset R in State		Return on Asset S in State		Return on Asset T in State
Boom		0.29		0.020		0.300		0.450
Growth		0.38		0.020		0.140		0.300
Stagnant		0.22		0.020		0.170		0.015
Recession		0.11		0.020		0.030		0.165

a.What is the expected return of each asset?

b.What are the variance and the standard deviation of each asset?

c.What is the expected return of a portfolio with equal investment in all three assets?

d.What is the portfolio's variance and standard deviation using the same asset weights in part (c)?

Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, only apply for the answers you will type.

a. What is the expected return of asset R?

(Round to four decimal places.)

What is the expected return of asset S?

(Round to four decimal places.)

What is the expected return of asset T?

(Round to four decimal places.)

b. What is the variance of asset R?

(Round to four decimal places.)

What is the variance of asset S?

(Round to four decimal places.)

What is the variance of asset T?

(Round to four decimal places.)

What is the standard deviation of asset R?

(Round to four decimal places.)

What is the standard deviation of asset S?

(Round to four decimal places.)

What is the standard deviation of asset T?

(Round to four decimal places.)

c.What is the expected return of a portfolio with equal investment in all three assets?

(Round to four decimal places.)

d. What is the portfolio's variance using the same asset weights from part (c)?

(Round to four decimal places.)

What is the portfolio's standard using the same asset weights from part (c)?

(Round to four decimal places.)