Calculate the expected return. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 
Expected return  [removed] % 
Calculate the standard deviation. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 
Standard deviation  [removed] % 
Q2.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  .15  .37  .47  .27  
Good  .45  .22  .18  .11  
Poor  .35  −  .04  −  .07  −  .05  
Bust  .05  −  .18  −  .22  −  .08  

a.  Your portfolio is invested 20 percent each in A and C, and 60 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) 
Expected return  [removed] % 
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  [removed] 
b–2.  What is the standard deviation? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) 
Standard deviation  [removed] % 
Q3.Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 0.8 and an expected return of 9.6 percent. If the riskfree rate is 5.2 percent and the market risk premium is 6.7 percent, the rewardtorisk ratios for stocks Y and Z are [removed] and [removed] percent, respectively. Since the SML rewardtorisk is [removed] percent
Q4. Based on the following information: 
State of Economy 
Return on Stock A 
Return on Stock B 
Bear  .107  −.050 
Normal  .110  .153 
Bull  .078  .238 
