Financial planning

9. value: 6.25 points

Consider the following information:

 

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Rate of Return if State Occurs
  State of Probability of
  Economy State of Economy Stock A Stock B Stock C
  Boom 0.56 0.06 0.14 0.34
  Bust 0.44 0.15 0.05 0.04

 

a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
  Expected return %

 

b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C?(Do not round intermediate calculations and round your answer to 6 decimal places. (e.g., 32.161616))
  Variance

10. 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 Stock C
  Boom 0.15 0.33 0.43 0.23
  Good 0.55 0.18 0.14 0.12
  Poor 0.25 0.05 0.08 0.06
  Bust 0.05 0.13 0.18 0.10
a. Your portfolio is invested 26 percent each in A and C, and 48 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., 32.16161))

 

  Variance
b–2 What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

 

  Standard deviation %

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