# Financial forcasting

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

 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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