Consider the following information about three stocks:

Rate of Return if State Occurs

State of economy	Probability of state of economy	Stock A	Stock B	Stock C
Boom	0.25	0.35	0.40	0.52
Normal	0.50	0.17	0.15	0.13
Bust	0.25	0.01	-0.32	-0.40

a-1

If your portfolio is invested 35 percent each in A and B and 30 percent in C, what is the portfolio expected return? (Round your answer to 2 decimal places. (e.g., 32.16))

a-2

What is the variance? (Do not round intermediate calculations and round your final answer to 5 decimal places. (e.g., 32.16161))

a-3

What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

b.

If the expected T-bill rate is 3.70 percent, what is the expected risk premium on the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))

c-1	If the expected inflation rate is 3.30 percent, what are the approximate and exact expected real returns on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

Approximate expected real return	%
Exact expected real return	%

What are the approximate and exact expected real risk premiums on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

Approximate expected real risk premium	%
Exact expected real risk premium	%