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

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Consider the following information about three stocks: Rate of Return if State Occurs Probability of State- of Economy State of Economy Stock A Stock B Stock C Boom .20 28 .40 .56 Normal 45 .22 .20 18 Bust 35 .00 -.20 -.48 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-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 4.20 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 3.80 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.) a-1. Portfolio expected return % a-2. Variance a-3. Standard deviation. % b. Expected risk premium % c-1. Approximate expected real return % c-1. Exact expected real return % c-2. Approximate expected real risk premium % c-2. Exact expected real risk premium %

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