Question: Consider the following data:
Rate of Return if State Occurs
|
State of Economy
|
Probability of State of Economy
|
Stock A
|
Stock B
|
Stock C
|
|
Boom
|
.20
|
.30
|
.45
|
.33
|
|
Good
|
.40
|
.12
|
.10
|
.15
|
|
Poor
|
.30
|
.01
|
-.15
|
-.05
|
|
Bust
|
.10
|
-.06
|
-.30
|
-.09
|
The portfolio is invested 30% each in A and C, & 40% in B. calculate the expected return of the portfolio?
Find the variance of this portfolio and standard deviation?