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Consider the following information: State of economy Boom Good Poor Bust Probability of state of economy 0.15 0.55 0.25 0.05 Variance % Rate of return if state occurs Stock A 0.30 0.17 0.03 -0. 10 a. Your portfolio is invested 26 percent each in A and C and 48 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round the final answer to 5 decimal places.) % Stock B 0.40 0.11 -0.06 -0.26 Stock C 0.31 0.10 -0.04 -0.07 b-2. What is the standard deviation? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Standard deviation

Consider the following information: State of economy Boom Good Poor Bust Probability of state of economy 0.15 0.55 0.25 0.05 Variance % Rate of return if state occurs Stock A 0.30 0.17 0.03 -0. 10 a. Your portfolio is invested 26 percent each in A and C and 48 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round the final answer to 5 decimal places.) % Stock B 0.40 0.11 -0.06 -0.26 Stock C 0.31 0.10 -0.04 -0.07 b-2. What is the standard deviation? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Standard deviation

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 6P
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Consider the following information: State of economy Boom Good Poor Bust Probability of state of economy 0.15 0.55 0.25 0.05 Standard deviation Rate of return if state occurs % Stock A 0.30 0.17 0.03 -0.10 Stock B 0.40 0.11 -0.06 -0.26 a. Your portfolio is invested 26 percent each in A and Cand 48 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round the final answer to 5 decimal places.) Variance Stock C 0.31 0.10 -0.04 -0.07 b-2. What is the standard deviation? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Transcribed Image Text:Consider the following information: State of economy Boom Good Poor Bust Probability of state of economy 0.15 0.55 0.25 0.05 Standard deviation Rate of return if state occurs % Stock A 0.30 0.17 0.03 -0.10 Stock B 0.40 0.11 -0.06 -0.26 a. Your portfolio is invested 26 percent each in A and Cand 48 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round the final answer to 5 decimal places.) Variance Stock C 0.31 0.10 -0.04 -0.07 b-2. What is the standard deviation? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
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