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Consider the following information about three stocks: Rate of Return if State Occurs Stock A Probability of State of Economy .25 .50 .25 State of

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Consider the following information about three stocks: Rate of Return if State Occurs Stock A Probability of State of Economy .25 .50 .25 State of Economy Boom Normal Bust .35 Stock B -40 .15 -32 Stock C .52 ..13 -.40 .17 .01 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? (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 3.70 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 3.30 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-2. What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) DS 21.93% 0.62383 24.98% 18.23% a-1. Portfolio expected return a-2. Variance a-3. Standard deviation b. Expected risk premium C-1. Approximate expected real retum C-1. Exact expected real return c-2. Approximate expected real risk premium c-2. Exact expected real risk premium 18.63% 18.03% 18.23% 17.65%

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