Consider the following information:Rate of Return If State OccursState ofProbability ofState ofEconomyEconomyStock AStock BStock CBoom.15.40.50.30Good.601610.09Poor.20-.02-.05-.03Bust.05-18-.25-11Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What isthe expected return of the portfolio? (Do not round intermediate calculations andenter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)b-1. What is the variance of this portfolio? (Do not round intermediate calculations andround your answer to 5 decimal places, e.g., 16161.)b-2. What is the standard deviation? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)a.%a.Expected returnb-1. Varianceb-2. Standard deviation10 of 15Next >Prev9,77928MacBook Air

Portfolio return is calculated by weighted average return of the stocks. Portfolio Return Rp = Wa*Ra…

Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Economy Stock A Stock B Stock C Boom 15 40 .50 .30 Good .60 16 10 -.05 .09 Poor .20 -.02 -.03 Bust .05 -18 -.25 -11

Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Economy Stock A Stock B Stock C Boom 15 40 .50 .30 Good .60 16 10 -.05 .09 Poor .20 -.02 -.03 Bust .05 -18 -.25 -11

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 9PROB

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Question

Consider the following information:
Rate of Return If State Occurs
State of
Probability of
State of
Economy
Economy
Stock A
Stock B
Stock C
Boom
.15
.40
.50
.30
Good
.60
16
10
.09
Poor
.20
-.02
-.05
-.03
Bust
.05
-18
-.25
-11
Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is
the expected return of the portfolio? (Do not round intermediate calculations and
enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b-1. What is the variance of this portfolio? (Do not round intermediate calculations and
round your answer to 5 decimal places, e.g., 16161.)
b-2. What is the standard deviation? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a.
%
a.
Expected return
b-1. Variance
b-2. Standard deviation
10 of 15
Next >
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