What is the expected return of the portfolio

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Reference no: EM132863429

Question - Consider the following information:

State / Probability / ABC Return / XYZ Return

Boom / 25% / 18% / 27%

Normal / 50% / 10% / 18%

Slowdown / 10% / 8% / 6%

Recession / 15% / -2% / -12%

Required - For both ABC and XYZ, answer the following.

1. What is the expected return of stocks ABC and XYZ?

2. What is the variance of stocks ABC and XYZ?

3. What is the standard deviation of stocks ABC and XYZ?

4. What is the expected return of the portfolio if $8,000 is invested in ABC and $13,000 in XYZ with only these two stocks in the portfolio?

Reference no: EM132863429

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