Consider the Following Probability Distribution for Stocks a and B

question 23

Multiple Choice

Consider the following probability distribution for stocks A and B: $$\begin{array} { c c c c } \text { State } & \text { Probability } & \text { Return on Stock A } & \text { Return on Stock B } \\1 & 0.10 & 10 \% & 8 \% \\2 & 0.20 & 13 \% & 7 \% \\3 & 0.20 & 12 \% & 6 \% \\4 & 0.30 & 14 \% & 9 \% \\5&0.20 & 15 \% & 8 \%\end{array}$$
If you invest 40% of your money in A and 60% in B,what would be your portfolio's expected rate of return and standard deviation?

• A) 9.9%;3%
• B) 9.9%;1.1%
• C) 11%;1.1%
• D) 11%;3%
• E) none of these

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