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Returns and standard deviation- Consider the following information: State of economy Probability of...

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Accounting

Returns and standard deviation- Consider the following information:

State of economy Probability of state of economy Rate of return if state occurs

Stock A Stock B Stock C

Boom .75 .07 .01 .27

Bust .25 .12 .19 -.05

a. What is the expected return on an equally weighted portfolio of these 3 stocks?

b. What is the variance of a portfolio invested 20% in each in A and B and 60% in C?

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