Problem 11-10 Returns and Standard Deviations [LO 1, 2] Your portfolio is invest
ID: 2738076 • Letter: P
Question
Problem 11-10 Returns and Standard Deviations [LO 1, 2]
Your portfolio is invested 32 percent each in A and C and 36 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places (e.g., 32.16161).)
What is the standard deviation of this portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Consider the following information:Explanation / Answer
Solution.
1. Porfolio retun of each stage of economy.
2. Expected return
3. Variance
4. Sstandard deviation
Square root of 0.1854
= 43.05%
State of Economy Stock A Stock B Stock C A x .32 B x .32 C x .36 Boom 0.367 0.467 0.347 0.1174 0.1494 0.1249 Good 0.137 0.117 0.187 0.0438 0.0374 0.0673 Poor 0.027 0.037 (0.092) 0.0086 0.0118 -0.0331 Bust (0.127) (0.267) (0.107) -0.0406 -0.0854 -0.0385 Return 0.1293 0.1133 0.1206