Item$4$

$20$

points

eBookHintPrintReferencesCheck my workCheck My Work button is now enabledItem $4$

Consider the following information on three stocks:

Rate of Return If State Occurs

State of

Economy Probability of

State of Economy Stock A Stock B Stock C

Boom $\mathrm{.}26\mathrm{.}32\mathrm{.}44\mathrm{.}56$

Normal $\mathrm{.}50\mathrm{.}13\mathrm{.}11\mathrm{.}09$

Bust $\mathrm{.}24\mathrm{.}04\mathrm{.}25\mathrm{.}45$

a$-1.$ If your portfolio is invested $40$ percent each in A and B and $20$ percent in C$,$ what is the portfolio expected return? $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

a$-2.$ What is the variance? $($Do not round intermediate calculations and round your answer to $5$ decimal places, e$.$g$.,\mathrm{.}32161.)$

a$-3.$ What is the standard deviation? $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ If the expected T$-$bill rate is $3\mathrm{.}30$ percent, what is the expected risk premium on the portfolio? $($Do not round intermediate calculations abd enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$-1.$ If the expected inflation rate is $2\mathrm{.}90$ percent, what are the approximate and exact expected real returns on the portfolio? $($Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$-2.$ What are the approximate and exact expected real risk premiums on the portfolio? $($Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$