Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following information about three stocks: table [ [ table [ [ State of ] , [ Economy ] ] ,

Consider the following information about three stocks:
\table[[\table[[State of],[Economy]],\table[[Probability of],[State of],[Economy]],Rate of Return if State Occurs],[Stock A,Stock B,Stock C],[Boom,0.25,0.35,0.40,0.52],[Normal,0.50,0.17,0.15,0.13],[Bust,0.25,0.01,-0.32,-0.40]]
a-1. If your portfolio is invested 35% each in A and B and 30% 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 %
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 3.80%, 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 2.70%, 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.)
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
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Gapenskis Fundamentals Of Healthcare Finance

Authors: Paula H. Song, Kristin L. Reiter

3rd Edition

1567939759, 978-1567939750

More Books

Students also viewed these Finance questions

Question

Please help me evaluate this integral. 8 2 2 v - v

Answered: 1 week ago

Question

=+3. How will you measure action objective?

Answered: 1 week ago

Question

=+2. What research methodologies would be most effective?

Answered: 1 week ago

Question

=+ Focus groups with representative publics. Which publics?

Answered: 1 week ago