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Consider the following information about three stocks Rate of Return If State Occurs State of Economy Boom Normal Bust Probability of State of Economy Stock
Consider the following information about three stocks Rate of Return If State Occurs State of Economy Boom Normal Bust Probability of State of Economy Stock A Stock C 30 .40 30 .27 23 01 Stock B 32 18 15 -48 -.32 a-1 If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Portfolio expected return 11.54 % a-2 What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Variance a-3 What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation b. If the expected T-bill rate is 4.90 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places e.g, 32.16.) Expected risk premium
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