The answers I have put in there already are wrong, I\'ve already posted this que

Question

The answers I have put in there already are wrong, I've already posted this question and the answers the person gave me were these which were wrong.

Consider the following information Rate of Return if State Occurs Probability of State of Economy .20 .40 10 30 State of Stock A Economy Boom Good Poor Bust Stock B Stock C .32 46 19 -.09 -.30 19 .04 -.04 -.05 -.09 a. Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Expected return 12.32 % b-1. What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.) Variance of this portfolio 02294 b-2. What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Standard deviation 15.14 %

Explanation / Answer

a. Return in boom = 0.2 *0.19 + 0.2*0.46 + 0.6*0.32 = 0.322

Return in Good = 0.2*0.12 + 0.2*0.19 + 0.6*0.14 = 0.146

Return in Poor = 0.2*0.04 + 0.2*-0.09 +0.6*-0.05 = -0.04

Return in Bad = 0.2*-0.04 + 0.2*-0.30 + 0.6*-0.09 = -0.122

Expected return = 0.2*0.322 + 0.4*0.146 +0.1*-0.04 +0.3*-0.122 = 0.0822 = 8.22%

The Variance and standard deviation is as shown below:

(b) Variance = 0.02713

(C) Standard deviation = 16.47%

Economy Prob P Return R R - E ( R) [R - E ( R)]^ 2 [R - E ( R)]^ 2 * P Boom 0.2 0.322 0.2398 0.05750404 0.011500808 Good 0.4 0.146 0.0638 0.00407044 0.001628176 Poor 0.1 -0.04 -0.1222 0.01493284 0.001493284 Bust 0.3 -0.122 -0.2042 0.04169764 0.012509292 Expected Return E ( R ) 8.22% Variance 0.02713156 Standard deviation 16.47%

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