Example:Portfolio Variance Consider the following information Invest 50%of your money in Asset A State Probability A B Portfolio a Boom .4 30% -5% 12.5% o Bust .6 -10% 25% 7.5% What is the expected return and standard deviation for each asset? What is the expected return and standard deviation for the portfolio? 1313 Example: Portfolio Variance n Consider the following information q Invest 50% of your money in Asset A q State Probability A B q Boom .4 30% -5% q Bust .6 -10% 25% n What is the expected return and standard deviation for each asset? n What is the expected return and standard deviation for the portfolio? Portfolio 12.5% 7.5%