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Consider the following information on three stocks: State Probability of Rate of Return if State Occurs Economy State of Economy Stock A Stock B Stock
Consider the following information on three stocks: State Probability of Rate of Return if State Occurs Economy State of Economy Stock A Stock B Stock C .25 .65 10 .27 Boom Normal Bust .09 .05 A portfolio is invested 45 percent each in Stock A and Stock B and 10 percent in Stock C. What is the expected rislk premium on the portfolio if the expected T-bill rate is 3.64 percent? O A. 12.74 percent O B. 11.47 percent O C. 7.81 percent O D. 8.27 percent
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