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

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Consider the following information about three stocks: State of Probability of Rate of Return if State Occurs Economy State of Economy Stock A Stock B Stock C Boom Normal 0.26 0.32 0.44 0.56 Bust 0.50 0.24 0.13 0.11 0.04 -0.25 0.09 -0.45 a-1. If your portfolio is invested 40% each in A and B and 20% in C, what is the portfolio expected return? (Do not round inte- calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return 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 d places.) Standard deviation % b. If the expected T-bill rate is 3.40%, what is the expected risk premium on the portfolio? (Do not round intermediate calculati Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium % c-1. If the expected inflation rate is 2.30%, what are the approximate and exact expected real returns on the portfolio? (Do not ra intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.)

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