60.1K

Verified Solution

Link Copied!

Rate of Return If State Occurs State of Economy Boom Normal Bust Stock C Probability of State of Economy 130 40 .30 Stock A 27 23 .01 55 Stock B 32 -18 - 32 15 -48 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? (Do not round intermediate calculations. Enter your answer as a percent rounded 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 answer to 5 decimal places, e.g. 32.16161.) Variance a-3 What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation b. If the expected T-bill rate is 4.90 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected risk premium % c-1 If the expected inflation rate is 4.40 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) Approximate expected real retum Exact expected real return % c-2 What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % Approximate expected real risk premium Exact expected real risk premium %

Answer & Explanation Solved by verified expert

See Answer