Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

table [ [ , , Rate of Return If State Occurs ] , [ State of Economy, table [ [ Probability of State

\table[[,,Rate of Return If State Occurs],[State of Economy,\table[[Probability of State],[of Economy]],Stock A,Stock B,Stock C,],[Boom,20,.38,.50,.54,],[Normal,.50,.21,16,.13,],[Bust,.30,.05,-.28,-.45,]]
a-1. If your portfollo is invested 35 percent each in A and B and 30 percent in C, what is the porffollo expected return? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,3216.)
a-2. What is the varlance? (Do not round Intermedlate calculatlons and round your answer to 5 decimal places, e.g.,16161.)
a-3. What is the standard deviation? (Do not round Intermedlate 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 4.70 percent, what is the expected risk premium on the portfollo? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 declmal places, e.g.,3216.)
c-1. If the expected inflation rate is 4.20 percent, what are the approximate and exact expected real returns on the portfollo? (Do not round Intermedlate 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 portfollo?
(Do not round Intermedlate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,32.16.)
\table[[a-1. Portfolio expected return,],[a-2. Variance,],[a-3. Standard deviation,%
image text in transcribed

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

Fixed Income Securities Tools For Todays Markets

Authors: Bruce Tuckman, Angel Serrat

3rd Edition

0470891696, 978-0470891698

More Books

Students also viewed these Finance questions