Problem 13-9 Returns and Variances (LO1, 2) Consider the following information: Probability of State of State of Economy Boom Bust Economy 0.60 0.40 Variance a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b. What is the variance of a portfolio invested 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Rate of Return if State Occurs Stock B Stock C 0.18 0.36 0.07 -0.05 Stock A 0.09 0.15 21.00 % 0.122985

Problem 13-9 Returns and Variances (LO1, 2) Consider the following information: Probability of State of State of Economy Boom Bust Economy 0.60 0.40 Variance a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return b. What is the variance of a portfolio invested 15% each in A and B and 70% in C? (Do not round intermediate calculations. Round the final answer to 6 decimal places.) Rate of Return if State Occurs Stock B Stock C 0.18 0.36 0.07 -0.05 Stock A 0.09 0.15 21.00 % 0.122985

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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