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Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $59,800 or $172,400, with equal probabilities of 0.5. The alternative

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Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $59,800 or $172,400, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 3%. Required: (a)If you require a risk premium of 5%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Price $ 107500 (b)Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Rate of return 7.99 % (c) Now suppose you require a risk premium of 9%. What is the price you will be willing to pay now? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Price $ 106514

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