We have a portfolio that is invested 70% in Asset A and 30% in Asset B. Assume the following
State of the Econ . Probability Exp.Ret (Asset A) Exp. Ret (Asset B)
Recession 40% -4% 2%
Expansion 60% 16% 6%
Calculate the Return of the portfolio under each of the given states of the economy
State of the Econ. Probability Return of the Portfolio containing 70% in A and 30% in B
Recession 40% _______-2.2% _________%
Expansion 60% _______13% _________%
What is the overall Expected return of the portfolio? Expected Return on the Portfolio = ___________ 6.92% ______________%
What is the standard deviation of the $10,000 portfolio? Standard Deviation of the $10,000 portfolio = _____ 7.446% ___________%