Problem 1:
|
|
Rate of Return if State Occurs |
| State of Economy |
Probability State of Economy |
Stock A |
Stock B |
Stock C |
|
| Boom |
0.25 |
0.25 |
0.45 |
0.25 |
|
| Good |
0.25 |
0.08 |
0.14 |
0.05 |
|
| Poor |
0.15 |
0.03 |
0.08 |
-0.02 |
|
| Bust |
0.35 |
-0.11 |
-0.02 |
-0.09 |
|
a. Your portfolio is invested 28 percent each in A and C, and 44 percent in B. The expected return of the portfolio is_______% (Input answer as a percent rounded to 2 decimal places).
b. The variance of this portfolio is________ (Round answer to 6 decimal places) and standard deviation is__________% (Input answer as a percent rounded to 2 decimal places).
Problem 2:
|
|
Rate of Return if State Occurs |
| State of Economy |
Probability State of Economy |
Stock A |
Stock B |
Stock C |
|
| Boom |
0.25 |
0.25 |
0.35 |
0.35 |
|
| Good |
0.25 |
0.09 |
0.11 |
0.07 |
|
| Poor |
0.05 |
0.04 |
0.04 |
-0.01 |
|
| Bust |
0.45 |
-0.09 |
-0.02 |
-0.04 |
|
a. Your portfolio is invested 16 percent each in A and C, and 68 percent in B. The expected return of the portfolio is________% (Input answer as a percent rounded to 2 decimal places).
b. The variance of this portfolio is________ (Round answer to 6 decimal places) and standard deviation is ________% (Input answer as a percent rounded to 2 decimal places).