Your portfolio is invested 32 percent each in A and C, and 36 percent in B. What

Question

  

  

Your portfolio is invested 32 percent each in A and C, and 36 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculaitons. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.

Consider the following information:

  

Rate of Return If State Occurs   State of Probability of   Economy State of Economy Stock A Stock B Stock C   Boom .15 .33 .43 .34   Good .50 .20 .14 .08   Poor .30 ?.01 ?.09 ?.03   Bust .05 ?.17 ?.29 ?.10

  

a.

Your portfolio is invested 32 percent each in A and C, and 36 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculaitons. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

  Expected return %

b-1 What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)   Variance

b-2

What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.

Explanation / Answer

expected return of portfolio = weightage of each security× expected return of that particular security.

here weightage of security A & C is 32% each and B is 36%

expected return = (32 × expected return of security A) + ( 32× expected return of security C) + (36× expected return of security B)

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