Consider a risky portfolio. The end$-$of$-$year cash flow derived from the portfolio will be either $$105,000$ or $$255,000$ with equal probabilities of $0\mathrm{.}5.$ The alternative risk$-$free investment in T$-$bills pays $3\%$ per year.

Required:

If you require a risk premium of $7\%,$ how much will you be willing to pay for the portfolio?

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?

Now suppose that you require a risk premium of $10\%.$ What price are you willing to pay?Consider a risky portfollo. The end$-$of$-$year cash flow derived from the portfolio will be elther $$105,000$ or $$255,000$

with equal probabilitles of $0\mathrm{.}5.$ The alternatlve risk$-$free Investment in T$-$bills pays $3\%$ per year.

Required:

a$.$ If you require a risk premlum of $7\%,$ how much will you be willing to pay for the portfollo?

b$.$ Suppose that the portfollo can be purchased for the amount you found In $($a$).$ What will be the expected rate of

return on the portfollo?

c$.$ Now suppose that you require a rlsk premlum of $10\%.$ What price are you willing to pay?

Complete this question by entering your answers in the tabs below.

If you require a risk premium of $8\%,$ how much will you be willing to pay for the portfolio?

Note: Do not round your intermediate calculations. Round your answer to the nearest whole dollar amount.

Price