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Consider the following information about three stocks: Rate of Return if State Occurs State of Economy Stock A Stock B Stock C Probability of State
Consider the following information about three stocks: Rate of Return if State Occurs State of Economy Stock A Stock B Stock C Probability of State of Economy .30 .40 .30 Boom Normal Bust .36 .15 .06 .48 .13 - 28 .60 .11 .48 a-1.If your portfolio is invested 25 percent each in A and B and 50 percent in C, what is the portfolio expected return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-2.What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 16161.) a-3.What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the expected T-bill rate is 3.50 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) C-1.If the expected inflation rate is 3.10 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) C- What are the approximate and exact expected real risk premiums on the portfolio? 2. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. Portfolio expected return % a-2. Variance a-3. Standard deviation % % b. Expected risk premium C-1. Approximate expected real return Exact expected real return C-2. Approximate expected real risk premium Exact expected real risk premium % % %
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