For Exercise 4.109, see page 220; for 4.110, see page 223; for 4.111 to 4.114, see page 228; for 4.115, see page 230; and for 4.116 to 4.118, see page 235.
4.114 Mean return on portfolio.
CASE 4.3 The addition rule for means extends to sums of any number of random variables. Let's look at a portfolio containing three mutual funds from three different industrial sectors: biotechnology, information services, and defense. The monthly returns on Fidelity Select Biotechnology Fund (FBIOX), Fidelity National Information Services Fund (FIX), and Fidelity Select Defense and Aerospace Fund (FSDAX) for the 60 months ending in July 2014 had approximately these means:30
What is the mean monthly return for a portfolio consisting of 50% biotechnology, 30% information services, and 20% defense and aerospace?