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Consider the following information about three stocks State of Economy Boon Normal Bust Probability of State of Economy 0.20 0.50 0.30 Rate of Return if
Consider the following information about three stocks State of Economy Boon Normal Bust Probability of State of Economy 0.20 0.50 0.30 Rate of Return if State Occurs Stock A Stock B stock 0.38 0.se 0.54 0.21 0.16 a. 13 0.05 0.28 -0.45 N a 1. If your portfolio is invested 35% each in A and B and 30% in a what is the portfolio expected return? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places. s Portfolio expected return 11.38 % a-2. What is the variance? (Do not round intermediate calculations. Round the final answer to 8 decimal places.) Variance a-3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation % b. If the expected T-bill rate is 4.90%, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium % c-1. If the expected inflation rate is 2.90%, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real return Exact expected real return c-2. What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real risk premium Exact expected real risk premium
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