Can you solve with details and please add a note and formulas,thank you. You own three stocks and have estimated the following joint probability distribution of returns: Market Condition Probability of Occurence Return on Stock A Return on Stock B Return on Stock C Return on Stock D Growth 35% 10 80 90 30 Normal 40% 40 20 10 30 Recession 25% 80 -10 -30 30   Calculate the portfolio’s expected return and standard deviation if you invest 35% in Stock A, 35% in Stock B, 30% in Stock C.  Calculate the portfolio’s expected return and standard deviation if you invest 25% in Stock A, 25% in Stock B, 25% in Stock C, 25% in Stock D,

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...
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Can you solve with details and please add a note and formulas,thank you.

You own three stocks and have estimated the following joint probability distribution of returns:

Market Condition

Probability of Occurence

Return on

Stock A

Return on

Stock B

Return on

Stock C

Return on

Stock D

Growth

35%

10

80

90

30

Normal

40%

40

20

10

30

Recession

25%

80

-10

-30

30

 

  1. Calculate the portfolio’s expected return and standard deviation if you invest 35% in Stock A, 35% in Stock B, 30% in Stock C. 
  2. Calculate the portfolio’s expected return and standard deviation if you invest 25% in Stock A, 25% in Stock B, 25% in Stock C, 25% in Stock D,.
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