Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 0.24 0 -0.09 Bust 0.35 -0.12 0.2 0.04 What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3) Enter the answer with 4 decimals (e.g. 0.1234).

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...
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Consider the following information:
State Probability Stock A Stock B Stock C
Boom 0.65
0.24 0 -0.09
Bust 0.35
-0.12 0.2 0.04
What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally
means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of
1/3) Enter the answer with 4 decimals (e.g. 0.1234).
Transcribed Image Text:Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 0.24 0 -0.09 Bust 0.35 -0.12 0.2 0.04 What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3) Enter the answer with 4 decimals (e.g. 0.1234).
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