6. value: 6.25 points

Consider the following information: |

State of Economy | Probability of State of Economy | Portfolio Return if State Occurs | ||||

Recession | 0.23 | − | 0.19 | |||

Normal | 0.48 | 0.20 | ||||

Boom | 0.29 | 0.28 | ||||

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Calculate the expected return. (Round your answer to 2 decimal places. (e.g., 32.16)) |

Expected return | % |

7. value: 6.25 points

Consider the following information: |

Rate of Return If State Occurs | |||||||||

State of | Probability of | ||||||||

Economy | State of Economy | Stock A | Stock B | ||||||

Recession | 0.15 | 0.06 | − | 0.19 | |||||

Normal | 0.60 | 0.09 | 0.10 | ||||||

Boom | 0.25 | 0.14 | 0.27 | ||||||

Calculate the expected return for the two stocks. (Round your answers to 2 decimal places. (e.g., 32.16)) |

Expected return | |

Stock A | % |

Stock B | % |

Calculate the standard deviation for the two stocks. (Do not round intermediate calculations andround your final answers to 2 decimal places. (e.g., 32.16)) |

Standard deviation | |

Stock A | % |

Stock B | % |

8. value: 6.25 points

A portfolio is invested 10 percent in Stock G, 50 percent in Stock J, and 40 percent in Stock K. The expected returns on these stocks are 7 percent, 13 percent, and 15 percent, respectively. What is the portfolio’s expected return? (Round your answer to 2 decimal places. (e.g., 32.16)) |

Portfolio’s expected return | % |

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