Rate of Return
State of Economy Probability of the State of Economy Stock A Stock B Stock C
Boom .58 .14 .22 .40
Bust .42 .16 .06 −.05
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 % b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C?