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Category > Business & Finance Posted 25 May 2017 My Price 12.00

00 points Consider the following information on a portfolio of three stocks:

00 points

Consider the following information on a portfolio of three stocks:

 

State of
Economy		 Probability of
State of Economy		 Stock A
Rate of Return		 Stock B
Rate of Return		 Stock C
Rate of Return
Boom .14 .07 .32 .55
Normal .55 .15 .17 .25
Bust .31 .16 –.16 –.35

 

Required:
(a)

If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio’s 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) and input your other answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

 

   
Expected return %
Variance  
Standard deviation %

 

(b)

If the expected T-bill rate is 4 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

 

Expected risk premium %

Answers

Homework Helper
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Status NEW Posted 25 May 2017 06:05 PM My Price 12.00

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