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  3. you have a portfolio which is comprised of 55 perc

You have a portfolio which is comprised of 55 percent of stock A and 45...

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Accounting

You have a portfolio which is comprised of 55 percent of stock A and 45 percent of stock B.

State of Economy Probability A B
Boom 0.20 22% 19%
Normal 0.70 12% 10%
Recession 0.10 -26% -4%

a) What is the expected return of the portfolio? Round percentage to two decimal places. (4 marks)

b) What is the standard deviation of the portfolio? Round percentage to two decimal places.

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