Please help! I keep getting the wrong answers! If you could show work that would
ID: 2768945 • Letter: P
Question
Please help! I keep getting the wrong answers! If you could show work that would be much appreciated! :)
2. 16.00 points Consider the following information Rate of Return if State Occurs State of Economy Boom Good Poor Bust Probability of State of Economy 0.15 0.60 0.20 Stock A 0.31 0.16 - 0.03 Stock B 0.41 0.12 Stock C 0.21 0.10 -0.04 - 0.08 - 0.06 -0.16 0.05 a. Your portfolio is invested 30 percent each in A and C, and 40 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)) Variancee b-2 What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 3 2.16)) Standard deviationExplanation / Answer
State of economy Stock A Stock B Probability Expected return STOCK A Expected return OF Stock B deviation from mean STOCK A deviation from mean STOCK B square of deviation from mean STOCK A square of deviation from mean*probability Stock A square of deviation from mean STOCK B square of deviation from mean*probability Stock B Boom 0.31 0.41 0.15 4.7% 6.15% -8.45% -5.20% 0.714025% 0.001071038 0.270400% 0.0004056 Good 0.16 0.12 0.6 9.6% 7.20% -3.50% -4.15% 0.122500% 0.000735 0.172225% 0.00103335 Poor -0.03 -0.06 0.2 -0.6% -1.20% -13.70% -12.55% 1.876900% 0.0037538 1.575025% 0.00315005 Bust -0.11 -0.16 0.05 -0.6% -0.80% -13.65% -12.15% 1.863225% 0.000931613 1.476225% 0.000738113 Expected return 13.10% 11.35% Variance 0.649% 0.533% standard deviation-Total risk 8.06% 7.30% State of economy Stock C Probability Expected return STOCK C deviation from mean STOCK C square of deviation from mean STOCK C square of deviation from mean*probability Stock C Boom 0.21 0.15 3.2% -4.80% 0.230400% 0.0003456 Good 0.1 0.6 6.0% -1.95% 0.038025% 0.00022815 Poor -0.04 0.2 -0.8% -8.75% 0.765625% 0.00153125 Bust -0.08 0.05 -0.4% -8.35% 0.697225% 0.000348613 Expected return 7.95% Variance 0.245% standard deviation-Total risk 4.95% PORTFOLIO portfolio return Return Variance Standard deviation A 30% 13.10% 0.649% 8.06% B 40% 11.35% 0.533% 7.30% C 30% 7.95% 0.245% 4.95% Portfolio return 10.86% 0.48% 6.82%