a. Your portfolio is invested 25% each in A and C and 50% in B. What is the expected return of the portfolio?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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2. Consider the following information:
STATE
ECONOMY
Boom
Good
Poor
Bust
OF PROBABILITY OF RATE OF RETURN IF STATE OCCURS
OF FIRM A
FIRM B
STATE
ECONOMY
0.15
0.55
0.20
0.10
0.33
0.11
0.02
-0.12
0.45
0.10
0.02
-0.25
FIRM C
b. What is the variance of this portfolio? The standard deviation?
0.33
0.17
-0.05
-0.09
a. Your portfolio is invested 25% each in A and C and 50% in B. What is the expected return of the
portfolio?
Transcribed Image Text:2. Consider the following information: STATE ECONOMY Boom Good Poor Bust OF PROBABILITY OF RATE OF RETURN IF STATE OCCURS OF FIRM A FIRM B STATE ECONOMY 0.15 0.55 0.20 0.10 0.33 0.11 0.02 -0.12 0.45 0.10 0.02 -0.25 FIRM C b. What is the variance of this portfolio? The standard deviation? 0.33 0.17 -0.05 -0.09 a. Your portfolio is invested 25% each in A and C and 50% in B. What is the expected return of the portfolio?
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