Rate of Return if State Occurs Probability of State State of Economy of Economy Boom .20 Stock A .20 Stock B .32 Stock C .54 Normal Bust .45 .35 .18 .02 .16 14 -.34 -.42 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., 32.16.) 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 3.80 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 3.40 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.) Answer is complete but not entirely correct. a-1. Portfolio expected return 6.28 % a-2. Variance 0.04386 a-3. Standard deviation 20.94 % b. Expected risk premium 2.48 % c-1. Approximate expected real return 2.88 % c-1. Exact expected real return 2.79 % c-2. Approximate expected real risk premium -0.92 % c-2. Exact expected real risk premium -0.89% < Prev