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Category > Business & Finance Posted 07 Jun 2017 My Price 8.00

Consider the following information about three stocks:

Consider the following information about three stocks:

 

    Rate of Return if State Occurs
State of Probability of
Economy State of Economy Stock A Stock B Stock C
Boom   0.20     0.20     0.32     0.54  
Normal   0.45     0.18     0.16     0.14  
Bust   0.35     0.02   ? 0.34   ? 0.42  

 

a-1

If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio expected return? (Round your answer to 2 decimal places. (e.g., 32.16))

 

Portfolio expected return %

 

a-2

What is the variance? (Do not round intermediate calculations and round your final answer to 5 decimal places. (e.g., 32.16161))
Variance  

 

a-3

What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

 

Standard deviation %

 

b.

If the expected T-bill rate is 3.80 percent, what is the expected risk premium on the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))

 

Expected risk premium %

 

c-1

If the expected inflation rate is 3.40 percent, what are the approximate and exact expected real returns on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

 

 
Approximate expected real return %
Exact expected real return %

 

c-2

What are the approximate and exact expected real risk premiums on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

 

 
Approximate expected real risk premium %
Exact expected real risk premium %

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Status NEW Posted 07 Jun 2017 07:06 AM My Price 8.00

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