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Consider the following information about three stocks: Rate of Return if State Occurs State of Stock A Stock B Probability of State of Economy 20

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Consider the following information about three stocks: Rate of Return if State Occurs State of Stock A Stock B Probability of State of Economy 20 -50 30 Economy Boom Normal Bust B .26 .10 .01 38 .08 - 20 Stock C .50 .06 - 40 a-1.If your portfolio is invested 30 percent each in A and B and 40 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- What is the variance? (Do not round intermediate calculations and round your 2. answer to 5 decimal places, e.g., .16161.) a- What is the standard deviation? (Do not round intermediate calculations and enter 3. your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the expected T-bill rate is 3.00 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 2.60 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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