question 8.

Rate of Return If State Occurs State of Stock A Economy Boom Normal Bust Probability of State of Economy 25 48 27 122 119 .03 Stock B .34 17 -.35 Stock C .56 .15 -.44 a-1. If your portfolio is invested 45 percent each In A and B and 10 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., 32.16.) a-2. What is the variance? (Do not round Intermediate calculations and round your answer to 5 decimal places, e.g., 16161.) 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., 32.16.) b. If the expected T-bill rate is 3.90 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.) C-1. If the expected inflation rate is 3.50 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., 32.16.) 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., 32.16.) % 2-1 Portfolio expected return a-2. Variance a-3. Standard deviation Centrale 04 percent C-1. If the expected inflation rate is 3.50 percent, what are the approximate a expected real returns on the portfolio? (Do not round Intermediate calcu and enter your answers as a percent rounded to 2 decimal places, e.g., c-2. What are the approximate and exact expected real risk premiums on the (Do not round Intermediate calculations and enter your answers as a p rounded to 2 decimal places, e.g., 32.16.) % % a-1. Portfolio expected return a-2. Variance a-3. Standard deviation b. Expected risk premium c-1. Approximate expected real return Exact expected real return c-2. Approximate expected real risk premium Exact expected real risk premium % % % % %