Consider the following information: Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Stock C Boom .68 .11 .05 .36 Bust .32 .25 .31 –.16 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 23 percent each in A and B and 54 percent in C?
Consider the following information: Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Stock C Boom .68 .11 .05 .36 Bust .32 .25 .31 –.16 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 23 percent each in A and B and 54 percent in C?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter6: Risk And Return
Section: Chapter Questions
Problem 12MC: Calculate the correlation coefficient between Blandy and the market. Use this and the previously...
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Question
Consider the following information: |
Rate of Return if State Occurs | ||||
State of | Probability of State | |||
Economy | of Economy | Stock A | Stock B | Stock C |
Boom | .68 | .11 | .05 | .36 |
Bust | .32 | .25 | .31 | –.16 |
a. |
What is the expected return on an equally weighted portfolio of these three stocks? |
|
b. | What is the variance of a portfolio invested 23 percent each in A and B and 54 percent in C? |
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