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 0.15 0.31 0.41 0.21
Good 0.60 0.16 0.12 0.10
Poor 0.20 -0.03 -0.06 -0.04
Bust 0.05 -0.11 -0.16 -0.08
a.) Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? (Round your answer to 2 decimal places. e.g., 32.16)
Expected return: _______________
b.-1) What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. e.g., 32.16)
Variance: _______________
b.-2) What is the standard deviation? (Do not round intermediate calculations and round your answer to 5 decimal places. e.g., 32.16)
Standard deviation: _______________