Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

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

image text in transcribed

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management and Cost Accounting

Authors: Colin Drury

8th edition

978-1408093887

Students also viewed these Finance questions

Question

Solve the equation for 0 0 360. 6 sin ( + 70) 5 cos ( + 70) = 0

Answered: 1 week ago