Determine the expected return and standard deviation

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Reference no: EM132012919

Suppose an investor creates a three asset portfolio combined of stock X, stock Y, and the risk-free asset. The investor puts 60% in Stock X, 30% in Stock Y, and 10% in the risk free rate.

Calculate the expected return and standard deviation on the portfolio. Round to 4 decimals.

The expected return on the risk free asset is 3%.

	Prob. Of State	Stock X	Stock Y
Boom	50%	12%	8%
Normal	15%	6%	-5%
Bust	35%	-3%	3%

Reference no: EM132012919

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