Question
Consider the following information on a portfolio of three stocks: State of Probability of Stock A Stock B Stock C Economy State of Economy Rate
Consider the following information on a portfolio of three stocks:
State of | Probability of | Stock A | Stock B | Stock C | ||||||||
Economy | State of Economy | Rate of Return | Rate of Return | Rate of Return | ||||||||
Boom | .14 | .05 | .35 | .47 | ||||||||
Normal | .52 | .13 | .25 | .23 | ||||||||
Bust | .34 | .19 | .24 | .38 | ||||||||
a. 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? (Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., 32.16161. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return | 10.84% | |
Variance | ||
Standard deviation | % | |
b. If the expected T-bill rate is 4.4 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected risk premium 6.44%
I need the variance and standard deviation.
Got answers for variance and standard deviation, but they were wrong: wrong answers for variance:0.00710 and standard deviation:8.43%. please get me a different and correct answer.
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