Problem 13-9 Returns and Variances (LO1) Consider the following information: Rate of Return If State...
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Problem 13-9 Returns and Variances (LO1) Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Stock A Stock B Economy Stock C Boom .58 .07 .15 .33 Bust .42 .16 -.06 .06 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 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., .161616.) % a. Expected return b. Variance
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