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4 pts Consider the following information on three stocks: State of Economy Probability of State of Economy Return if State Occurs Stock A Stock B

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4 pts Consider the following information on three stocks: State of Economy Probability of State of Economy Return if State Occurs Stock A Stock B Stock Boom -65 .45 42 135 Normal .04 .50 .31 .18 Bust -64 .17 - 17 A portfolio is invested 35 percent each in stock A and stock B and rest in stock C. What is the expected risk premium on the portfolio if the expected T-bill rate is 3.3 percent and expected inflation rate is 2.0 percent? O 16.57 percent 25.82 percent 12.77 percent O 17.87 percent

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