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Consider the following information about three stocks: Rate of Return if State Occurs Probability of - State of Economy Stock A State of Economy Boom
Consider the following information about three stocks: Rate of Return if State Occurs Probability of - State of Economy Stock A State of Economy Boom Normal Bust Stock C 30 Stock B 32 .18 - 32 15 .40 30 .48 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 and enter your answer as a percent rounded to 2 decimal places, e.g., 32.18.) Q. What is the variance? (Do not round Intermediate calculations and round your 2. answer to 5 decimal places, e.g., .18161.) Q. 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., 32.18.) 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 and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. If the expected inflation rate is 4.40 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., 32.10.) 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.)
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