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Rate of Return If State Occurs State of Economy Boom Normal Bust Probability of State of Economy .20 .50 .30 Stock B .38 Stock A
Rate of Return If State Occurs State of Economy Boom Normal Bust Probability of State of Economy .20 .50 .30 Stock B .38 Stock A .26 .10 .01 Stock C .50 .08 .06 -.20 -.40 a-1If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Portfolio expected return % a-2 What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Variance = a-3 What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation % b.If the expected T-bill rate is 3.00 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected risk premium C-1If the expected inflation rate is 2.60 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % Approximate expected real return Exact expected real return C-What are the approximate and exact expected real risk premiums on the portfolio? (Do not 2 round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate expected real risk premium Exact expected real risk premium
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