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  3. problem 13-9 returns and variances [lo1] consid

Problem 13-9 Returns and Variances [LO1] Consider the following information: ...

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Accounting

Problem 13-9 Returns and Variances [LO1]

Consider the following information:

Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock A Stock B Stock C
Boom .58 .08 .17 .37
Bust .42 .14 .06 .04

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 percent rounded to 2 decimal places, e.g., 32.16.)

Expected return 14.23 %

b.

What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.)

Variance ?

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