Consider the following information: Rate of return if state occurs State of Economy Probability of state of economy Stock A Stock B Stock C

Boom .71 .09 .03 .39

Bust .29 .28 .34 -.19

a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return = 16.23 %

b. What is the variance of a portfolio invested 26 percent each in A and B and 48 percent in C? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

Variance of a portfolio =