| Rate of Return if State Occurs | ||||||||||||
| State of | Probability of |
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| Economy | State of Economy | Stock A | Stock B | Stock C | ||||||||
| Boom | 0.10 | 0.30 | 0.40 | 0.20 | ||||||||
| Good | 0.50 | 0.15 | 0.11 | 0.09 | ||||||||
| Poor | 0.35 | – | 0.02 | – | 0.05 | – | 0.03 | |||||
| Bust | 0.05 | – | 0.10 | – | 0.15 | – | 0.07 | |||||
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Your portfolio is invested 32 percent each in A and C, and 36 percent in B.What is the expected return of the portfolio? What is the variance of this portfolio? What is the standard deviation? |
