The stock of Business Adventures sells for $35 a share. Its likely dividend payout and end-of-year price depend on the state of the 1 economy by the end of the year as follows: Boom Normal economy Recession Expected return Standard deviation Required: a. Calculate the expected holding-period return and standard deviation of the holding-perlod return. All three scenarios are equally likely. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Expected return Standard deviation Dividend $ 2.50 X Answer is not complete. 2.00 0.85 Value of the Portfolio Stock Price $43 40 31 b. Calculate the expected return and standard deviation of a portfolio Invested half in Business Adventures and half in Treasury bills. The return on bills is 3%. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Rate of return 0.20% 2 Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be elther $70,000 or $180,000, with equal probabilities of 0.5. The alternative riskless Investment in T-bills pays 4%. Value of the portfolio % Required: a. If you require a risk premium of 12%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) % 96 %6 b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be? (Do not round Intermediate calculations. Round your answer to the nearest whole percent.) c. Now suppose you require a risk premium of 16%. What is the price you will be willing to pay now? (Round your answer to the nearest dollar amount.)