Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 13-23 Portfolio Returns and Deviations (LO1, 2) Consider the following information about three stocks: State of Economy Boom Normal Bust Probability of State of

image text in transcribed
image text in transcribed
Problem 13-23 Portfolio Returns and Deviations (LO1, 2) Consider the following information about three stocks: State of Economy Boom Normal Bust Probability of State of Economy 3.25 0.44 0.31 Rate of Return if State Occurs Stock A Stocks Stock 0.36 0.48 0.52 0.20 0.15 0.12 0.04 -0.26 -0.44 0-1. If your portfolio is invested 40% each in A and B and 20% 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 6-3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation Activate Windows Go to per settings to activate Wind rou E: Ney Check my work . 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 4.80%, 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 2.80%, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter the answers as a percent routed to 2 decimal places.) Approximate expected real return Exact expected real return 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

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

Beyond Blockchain The Death Of The Dollar And The Rise Of Digital Currency

Authors: Erik Townsend

1st Edition

172917728X, 978-1729177280

More Books

Students also viewed these Finance questions