chap 5 q 6

Consider a risky portfolio. The end of year cash flow derived from the portfolio will be other $50,000 or $155.000, with equal probabilities of 0.5. The tomative riskless investment in Tbils pays 6% a. If you require a risk premium of 7%, how much will you be wiling to pay for the portfolio? (Round your answer to the nearest dollar amount.) Value of the portfolio $ b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of retum on the portfolio be? (Do not round Intermediate calculations. Round your answer to the nearest whole percent.) Rate of rolum % c.Now suppose you require a risk premium of 11%. What is the price you will be willing to pay now?(round your answer to the nearest dollar amount.) Value of the portfolio $