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Il. Risk and Return (35 points) Rate of Return is State Occurs | Stock A...

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Il. Risk and Return (35 points) Rate of Return is State Occurs | Stock A % State of Economy Growth Stagnant Beta Probability of State occurring .20 .80 Stock B % Stock C % 20 5 1.31 12 8.5 0.9 12.5 9.3 1.07 Given the following above information: a. What is the expected return of each stock? b. What is the expected return on a portfolio that is invested 30 percent in Stock A, 35 percent c. What is the standard deviation on a portfolio that is invested 30 percent in Stock A, 35 d.Ms. Prentise has a portfolio worth $50000 consisting of stock A, B and C; 25% of which is in Stock B, and the remainder in Stock C? percent in Stock B, and the remainder in Stock C? invested in stock A. How much did she invest in stock C if the portfolio is as 110% as risky as the market? e.Using the expected return of each stock you find in part a and the beta of each stock, find the risk-free rate if stock B and C have the same reward-to-risk ratio

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