Question

What is the expected standard deviation of stock A’s returns based on the information presented in the table? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. Note that figures in the table are presented in decimal format, not as percentages.

Outcome	Probability of outcome	Stock A return in outcome
Good	0.3	0.4
Medium	0.4	0.1
Bad	?	-0.4

Rogelio’s portfolio is worth 73,600 dollars and has three stocks. It has 12,300 dollars of stock A, which has an expected return of 4.95 percent; it has 2,000 shares of stock B, which has a share price of 8 dollars and an expected return of 9.12 percent; and it has some stock C, which has an expected return of 16.58 percent. What is the expected return of Rogelio’s portfolio? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. answer both plz

Answer 1

1.
=sqrt(0.3*(0.4-(0.3*0.4+0.4*0.1+0.3*(-0.4)))^2+0.4*(0.1-(0.3*0.4+0.4*0.1+0.3*(-0.4)))^2+0.3*(-0.4-(0.3*0.4+0.4*0.1+0.3*(-0.4)))^2)
=31.369%

2.
=(12300*4.95%+2000*8*9.12%+(73600-12300-2000*8)*16.58%)/73600
=13.015%