a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the variance of a portfolio invested 24 percent each in A and B and 52 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
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Consider the following information:
Rate of Return If State Occurs
State of Probability of
State of
Economy
Stock A
Stock B
Stock C
Economy
.68
Вoom
.13
.22
.40
Bust
.32
.10
.04
-.08
a. What is the expected return on an equally weighted portfolio of these three
stocks? (Do not round intermediate calculations and enter your answer as
a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the variance of a portfolio invested 24 percent each in A and B and
52 percent in C? (Do not round intermediate calculations and round your
answer to 6 decimal places, e.g., .161616.)
a. Expected return
%
b. Variance
Transcribed Image Text:Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Stock A Stock B Stock C Economy .68 Вoom .13 .22 .40 Bust .32 .10 .04 -.08 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the variance of a portfolio invested 24 percent each in A and B and 52 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) a. Expected return % b. Variance
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