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 0.26 0.38 0.50 Normal 0.50 0.10 0.08 0.06 Bust 0.30 0.01 â 0.20 â 0.40 a-1 If your portfolio is invested 30 percent each in A and B and 40 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 3.00 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 2.60 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 %
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 0.26 0.38 0.50 Normal 0.50 0.10 0.08 0.06 Bust 0.30 0.01 â 0.20 â 0.40 a-1 If your portfolio is invested 30 percent each in A and B and 40 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 3.00 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 2.60 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 %
Related questions
| 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 | 0.28 | 0.40 | 0.56 | ||||||||
| Normal | 0.45 | 0.22 | 0.20 | 0.18 | ||||||||
| Bust | 0.35 | 0.00 | ? | 0.20 | ? | 0.48 | ||||||
| a-1 | If your portfolio is invested 30 percent each in A and B and 40 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 4.20 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 3.80 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 | % |
| 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 | 0.25 | 0.36 | 0.48 | 0.52 | ||||||||
| Normal | 0.44 | 0.20 | 0.15 | 0.12 | ||||||||
| Bust | 0.31 | 0.04 | â | 0.26 | â | 0.44 | ||||||
| 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 4.60 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 4.10 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 | % |
