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Portfolio Performance
Consider a portfolio with $296 invested in Stock A, $263 invested in Stock B and $112 invested in Stock C.
The probability of a Weak Economy is 0.1, the probability of a Strong Economy is 0.1, and the probability of an Average Economy is 0.8
Stock A pays 2% in a Weak Economy, -1.6% in a Strong Economy, and -4.7% in an Average Economy
Stock B pays 4.7% in a Weak Economy, 9.1% in a Strong Economy, and 6.7% in an Average Economy
Stock C pays -1.1% in a Weak Economy, 3.4% in a Strong Economy, and 2.5% in an Average Economy
Read the information above carefully.
First create a table that summarizes the information above
Then solve for the performance of the Portfolio when the economy is Strong
(hint: you only need the weight of each stock and the returns in a strong economy)
Include your answer as a percentage to two decimals
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