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Rate of Return If State Occurs State of Stock A Stock B Economy Boom Normal Bust Probability of State of Economy 20 .45 .35 .28

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Rate of Return If State Occurs State of Stock A Stock B Economy Boom Normal Bust Probability of State of Economy 20 .45 .35 .28 .22 .00 .40 .20 -20 Stock C .56 .18 --48 a-1. If 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 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 4.20 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 3.80 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.)

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