Use the Information in the Table to Calculate the Expected

question 56

Essay

Use the information in the table to calculate the expected return and standard deviation of an equally-weighted portfolio. $$\begin{array} { | l | c | c | c | c | } \hline & &&{ \text { Investment Asset } } \\\hline \begin{array} { c } \text { States of the } \\\text { Economy }\end{array} & \begin{array} { c } \text { Probabilities of States } \\\text { of the Economy }\end{array} & \text { Asset A } & \text { Asset B } & \text { Asset C } \\\hline \text { Boom } & 20 \% & 10 \% & 20 \% & - 10 \% \\\hline \text { Steady } & 30 \% & 8 \% & 10 \% & 2 \% \\\hline \text { Bust } & 50 \% & 4 \% & 0 \% & 18 \% \\\hline\end{array}$$

---

Definitions:

Monthly Salary

A fixed amount of money or compensation paid to an employee by an employer for services rendered during a month.

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, often a percentage of the transaction.

Appliances

Electrical or mechanical machines that perform domestic functions, such as refrigerators or washing machines.

Net Proceeds

The final amount of money received from a transaction after deducting all associated costs and expenses.