Question

please provide assistance with the following as well as step by step instruction

3. Returns and Variances [LOI] Consider the following information: Rate of Return If Probability of State of State of State Occurs Economy Economy Stock Stock Stock A C .15 25 75 .06 Boom Bust -.08 .11 -04 .25 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? 4. Returns and Standard Deviations [LOI] Consider the following infommation: Probability of Rate of Return If State Occurs State of State of Stock B Stock C Stock A Economy Economy 35 16 45 27 Boom 10 10 06 20 .08 Good .60 04 09 Fage &Your portfolio is invested 30 percent each in A and C, and 40 percent in B. 25 01 Poor 12 05 Bust What is the expected return of the portfolio? b. What is the variance of this portfolio? The standard deviation? 5. Calculating Portfolio Betas 1 041 You own a stock portfolio invested 20 perceht in Stock Q. 30 percent in Stock R. 35 percent in Stock S, and 15 percent in Stock T The betas for these four stocks are $4, 1.17, 1.0S, and 1.36 respectively What is the portfolio beta 6 Calculating Portfolio Betas LO4) You own a portfolic equally invested in a nsk-free asset and two tocks If one of the stociks has a beta cf 132 and the total portiolio i equally as rink as the markcet 1uhat must the beta be for the ethe: stock in yor pertfelio OH

question 4

your portfolio is invested 30% each in A and C, and 40% in B what us the expected return if the portfolio? Also what is the variance of this portfolio? the standard deviation. pleas give steps and calculation

Answer 1

Answer to Question 3:

Requirement a:

Weight of Stock A = 1/3
Weight of Stock B = 1/3
Weight of Stock C = 1/3

Boom:

Expected Return = (1/3) * 0.06 + (1/3) * 0.15 + (1/3) * 0.25
Expected Return = 0.1533

Bust:

Expected Return = (1/3) * 0.11 + (1/3) * (-0.04) + (1/3) * (-0.08)
Expected Return = -0.0033

Expected Return of Portfolio = 0.75 * 0.1533 + 0.25 * (-0.0033)
Expected Return of Portfolio = 0.1142 or 11.42%

Requirement b:

Weight of Stock A = 0.20
Weight of Stock B = 0.20
Weight of Stock C = 0.60

Boom:

Expected Return = 0.20 * 0.06 + 0.20 * 0.15 + 0.60 * 0.25
Expected Return = 0.1920

Bust:

Expected Return = 0.20 * 0.11 + 0.20 * (-0.04) + 0.60 * (-0.08)
Expected Return = -0.0340

Expected Return of Portfolio = 0.75 * 0.1920 + 0.25 * (-0.0340)
Expected Return of Portfolio = 0.1355 or 13.55%

Variance of Portfolio = 0.75 * (0.1920 - 0.1355)^2 + 0.25 * (-0.0340 - 0.1355)^2
Variance of Portfolio = 0.009577