Problem 13-10 Returns and Standard Deviations [LO1]
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 | .36 | .46 | .26 | ||||||||
Good | .45 | .21 | .17 | .10 | ||||||||
Poor | .35 | −.03 | −.06 | −.04 | ||||||||
Bust | .05 | −.17 | −.21 | −.07 | ||||||||
a. |
Your portfolio is invested 22 percent each in A and C, and 56 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.) |
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Problem 13-10 Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If...
Problem 13-10 Returns and Standard Deviations (LO1) Consider the following information: Rate of Return if State Occurs State of Probability of State of Economy Economy Stock A Stock B Stock C 34 .08 33 .15 .50 .43 .14 Boom Good Poor Bust -03 05 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 calculations and enter your answer...
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