Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following information about three stocks: Probability of Rate of Return if State Occurs State of State of Economy Economy Stock A Stock Stock

image text in transcribed

Consider the following information about three stocks: Probability of Rate of Return if State Occurs State of State of Economy Economy Stock A Stock Stock C Room 0.22 0.30 0.42 0.58 Normal 0.46 0.23 0.21 0.19 Buat 0.32 0.01 -0.22 -0.50 2-1. If your portfolio is invested 25% each in A and B and 50% in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return 3-2. What is the variance? (Do not round Intermediate calculations. Round the final answer to 8 decimal places.) Variance a-3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation b. If the expected T-bill rate is 4.50%, what is the expected risk premium on the portfolio? (Dorfot round intermediate calculations Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium c-1. If the expected inflation rate is 2.50%, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Derivatives And Risk Management

Authors: Don M. Chance, Roberts Brooks

7th Edition

0324321392, 9780324321395

More Books

Students also viewed these Finance questions