Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

State of Probability of Stock A Stock B Stock C Economy State of Economy Rate of Return Rate of Return Rate of Return Boom .15

State of Probability of Stock A Stock B Stock C
Economy State of Economy Rate of Return Rate of Return Rate of Return
Boom .15 .08 .33 .44
Normal .54 .16 .28 .26
Bust .31 .17 .27 .36

a. If your portfolio is invested 38 percent each in A and B and 24 percent in C, what is the portfolios expected return, the variance, and the standard deviation? (Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., 32.16161. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return %
Variance
Standard deviation %

b. If the expected T-bill rate is 4.55 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.) Expected risk premium %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

4th Edition

0136117007, 9780136117001

More Books

Students also viewed these Finance questions

Question

What are the general types of interviews? Explain each.

Answered: 1 week ago

Question

6 How can HRM contribute to ethical management and sustainability?

Answered: 1 week ago