Problem 13-9 Returns and Variances [LO1] Consider the following information: ...
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Accounting
Problem 13-9 Returns and Variances [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
.58
.08
.17
.37
Bust
.42
.14
.06
.04
a.
What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return 14.23
%
b.
What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.)
Variance ?
Answer & Explanation
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