Question
1. Consider the following information on a portfolio of three stocks: State of Economy Probability of State of Economy Stock A Stock B Stock C
1. Consider the following information on a portfolio of three stocks:
State of Economy Probability of State of Economy Stock A Stock B Stock C Rate of Return Rate of Return Rate of Return Boom .12 .11 .36 .41 Normal .51 .19 .31 .29 Bust .37 .20 .30 .39
a. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolios expected return?
(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolios variance?
(Do not round intermediate calculations. Round your variance answer to 4 decimal places, e.g., 0.1616.)
c. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolios standard deviation?
(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
d. If the expected T-bill rate is 4.7 percent, what is the expected risk premium on the portfolio?
(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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