Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following information on a portfolio of three stocks: State of Economy Probability of State of Economy Stock A Rate of Return Stock B

Consider the following information on a portfolio of three stocks:
State of Economy Probability of State of Economy Stock A Rate of Return Stock B Rate of Return Stock C Rate of Return
Boom .13.10.35.42
Normal .52.18.30.28
Bust .35.19.29.38
If your portfolio is invested 42 percent each in A and B and 16 percent in C, what is the portfolios expected return, the variance, and the standard deviation?
Note: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g.,.16161. Enter your other answers as a percent rounded to 2 decimal places, e.g.,32.16.
If the expected T-bill rate is 4.65 percent, what is the expected risk premium on the portfolio?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.

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

Financial Management for Public Health and Not for Profit Organizations

Authors: Steven A. Finkler, Thad Calabrese

4th edition

133060411, 132805669, 9780133060416, 978-0132805667

More Books

Students also viewed these Finance questions

Question

10 7

Answered: 1 week ago

Question

List six habits that can help you become a more positive thinker.

Answered: 1 week ago

Question

Explain how to handle criticism well.

Answered: 1 week ago

Question

Describe how self-defeating attitudes create a vicious cycle.

Answered: 1 week ago