Consider a risky portfolio. The end$-$of$-$year cash flow derived from the portfolio will be either $$80,000$ or $$220,000$ with equal

probabilities of $0\mathrm{.}5.$ The altemative risk$-$free investment in T$-$bills pays $5\%$ per year.

a$.$ If you require a risk premium of $5\%,$ how much will you be willing to pay for the portfolio? $($Round your answer to the nearest whole

dollar amount.$)$

b$.$ Suppose that the portfolio can be purchased for the amount you found in $($a$).$ What will be the expected rate of return on the

portfolio? $($Round your answer to the nearest whole number.$)$

Rate of return

c$.$ Now suppose that you require a risk premium of $10\%.$ What price are you willing to pay? $($Round your answer to the nearest whole

dollar amount.$)$

Price