B2 ) Consider the following information on a portfolio of three stocks: State of Economy Probability of State of Economy Boom .15 Stock A Rate of Return .05 Stock B. Rate of Return 21 Stock C Rate of Return .18 Normal 80 08 15 .07 Bust 05 12 22 -02 The portfolio is invested 35 percent in each Stock A and Stock B and 30 percent in Stock C. If the expected T-bill rate is 3.90 percent, what is the expected risk premium on the portfolio? (10 marks) ii) Explain the relationships among the reward-to-risk ratio, risk-free rate of return, market rate of return, market risk premium, beta, and the security market line. (10 marks) (20 marks)