State |
Probability |
Return on Stock X |
Return on Stock Y |
Boom |
60 |
0.15 |
0.08 |
Bust |
40 |
0.05 |
0.20 |
What is the standard deviation of Stock X? What is the expected return on a portfolio that is equally weighted amongst Stocks X&Y, and a risk free asset? The expected return on the risk-free asset is 4%. Is the answer 8.9, 9.3, 10.1 or 11.8?