What is the standard deviation of a portfolio which is invested 20% in stock A, 30% in stock B and 50% in stock C?
$\begin{array}{llcc}
\text { State of } & \text { Probability of } & \underline{\text { Returns if State Occurs }} \
\underline{ \text { Economy }} & \underline{\text { State of Economy }} & \underline{\text {Stock A\quad Stock B\quad Stock C}} \
\text {Boom } & 10\% &15\% \quad \quad 10\%\quad \quad 5\%\
\text { Normal} & 70\%& 9\%\quad \quad 6\%\quad \quad 7\%\
\text { Recession } & 20\%&-14\%\quad \quad 2\%\quad \quad 8\% \
\end{array}$

A)0.6%
B)0.9%
C)1.8%
D)2.2%
E)4.9%

Question

What is the standard deviation of a portfolio which is invested 20% in stock A, 30% in stock B and 50% in stock C? 
$\begin{array}{llcc}
  \text { State of } & \text { Probability of } & \underline{\text { Returns if State Occurs }}  \
\underline{ \text { Economy }} & \underline{\text { State of Economy }} & \underline{\text {Stock A\quad  Stock B\quad  Stock C}} \
 \text {Boom  } &  10\%  &15\% \quad \quad 10\%\quad \quad 5\%\
 \text {  Normal} & 70\%& 9\%\quad \quad 6\%\quad \quad 7\%\
 \text { Recession  } & 20\%&-14\%\quad \quad 2\%\quad \quad 8\% \
\end{array}$

A)0.6%
B)0.9%
C)1.8%
D)2.2%
E)4.9%

Quizplus · Accepted Answer

The correct answer is D because the standard deviation of the portfolio is 2.2%.

What Is the Standard Deviation of a Portfolio Which Is