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State of Economy Boom Normal Bust Probability of State of Economy 8.20 0.40 0.40 Rate of Return if State Occurs Stock A Stock B Stock

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State of Economy Boom Normal Bust Probability of State of Economy 8.20 0.40 0.40 Rate of Return if State Occurs Stock A Stock B Stock C 0.34 0.46 0.50 0.25 0.23 0.20 0.03 -0.25 -0.42 0-1. If your portfolio is invested 35% each in A and B and 30% 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 960 % 0.2. What is the variance? (Do not round intermediate calculations. Round the final ontwer to 8 decimal places.) Variance 006504120 03. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation 25.50 % b. If the expected T-bill rate is 470%, 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.) b. If the expected T-bill rate is 470%, what is the expected tisk premium on the portfolio? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium 4.90 % c 1. If the expected inflation rate is 2.70%, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real return Exact expected real return 6.90 6.72 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 2.90 4.27 @ @

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