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        .62                         .09            .17      .35  

Bust          .38                          .20           .10         −.06  

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

Expected return   %

b. What is the variance of a portfolio invested 16 percent each in A and B and 68 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.)

Variance