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Consider the following information about three stocks: State of Economy Boom Normal Bust Probability of State of Economy 0.25 8.50 0.25 Rate of Return if
Consider the following information about three stocks: State of Economy Boom Normal Bust Probability of State of Economy 0.25 8.50 0.25 Rate of Return if State Occurs Stock A Stock B Stock 0.34 8.46 0.58 0.14 0.12 0.10 0.85 -0.26 -0.46 2-1. If your portfolio is invested 20% each in A and B and 60% in C, what is the portfolio expected return? (Do not round Intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return 1% a-2. What is the variance? (Do not round Intermediate calculations. Round the final answer to 8 decimal places.) Variance 2-3. 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 3.50%, 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 240%, 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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