Answer to Question 3:
Requirement a:
Weight of Stock A = 1/3
Weight of Stock B = 1/3
Weight of Stock C = 1/3
Boom:
Expected Return = (1/3) * 0.06 + (1/3) * 0.15 + (1/3) *
0.25
Expected Return = 0.1533
Bust:
Expected Return = (1/3) * 0.11 + (1/3) * (-0.04) + (1/3) *
(-0.08)
Expected Return = -0.0033
Expected Return of Portfolio = 0.75 * 0.1533 + 0.25 *
(-0.0033)
Expected Return of Portfolio = 0.1142 or 11.42%
Requirement b:
Weight of Stock A = 0.20
Weight of Stock B = 0.20
Weight of Stock C = 0.60
Boom:
Expected Return = 0.20 * 0.06 + 0.20 * 0.15 + 0.60 * 0.25
Expected Return = 0.1920
Bust:
Expected Return = 0.20 * 0.11 + 0.20 * (-0.04) + 0.60 *
(-0.08)
Expected Return = -0.0340
Expected Return of Portfolio = 0.75 * 0.1920 + 0.25 *
(-0.0340)
Expected Return of Portfolio = 0.1355 or 13.55%
Variance of Portfolio = 0.75 * (0.1920 - 0.1355)^2 + 0.25 *
(-0.0340 - 0.1355)^2
Variance of Portfolio = 0.009577
please provide assistance with the following as well as step by step instruction question 4 your...
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