A well noted financial forecaster has provided the following expected returns and probability

A well noted financial forecaster has provided the following expected returns and probability information for three stocks and the market.

a.       Calculate the expected rate of return for stock A, stock B, stock C and the market portfolio.

b.      Calculate the standard deviation for stock A, stock B, stock C and the market portfolio.

c.       Calculate the correlation coefficient for stock A, stock B and stock C.  (Hint: this is not one number.)

d.      Calculate the expected return for a portfolio consisting of 30% stock A, 40% stock B and 30% stock C.

e.       Calculate the standard deviation of the portfolio consisting of 30% stock A, 40% stock B and 30% stock C.

f.       Is there any benefit in combining these three stocks in a portfolio.

g.      Calculate the Beta of stock A, stock B and stock C.

NOTE: the formula for a the variance of a three stock portfolio would be:

Variance of portfolio = WA^2StdevA^2+WB^2StdevB^2+WC^2StdevC^2+

2WAWBStdevAStdevBCORRAB+2WAWCStdevAStdevCCORRAC+2WBWCStdevBStdevCCORRBC