# Question

Consider the following information on three stocks:

a. If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? The variance? The standard deviation?

b. If the expected T-bill rate is 3.80 percent, what is the expected risk premium on the portfolio?

c. If the expected inflation rate is 3.10 percent, what are the approximate and exact expected real returns on the portfolio? What are the approximate and exact expected real risk premiums on the portfolio?

a. If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? The variance? The standard deviation?

b. If the expected T-bill rate is 3.80 percent, what is the expected risk premium on the portfolio?

c. If the expected inflation rate is 3.10 percent, what are the approximate and exact expected real returns on the portfolio? What are the approximate and exact expected real risk premiums on the portfolio?

## Answer to relevant Questions

You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. Given this information, fill in the rest of the following table: You own a portfolio that is 45 percent invested in Stock X, 30 percent invested in Stock Y, and 25 percent invested in Stock Z. The expected returns on these three stocks are 10 percent, 13 percent, and 17 percent, ...Assume stocks A and B have the following characteristics: The covariance between the returns on the two stocks is .01. a. Suppose an investor holds a portfolio consisting of only stock A and stock B. Find the portfolio ...Kose, Inc., has a target debt-equity ratio of .65. Its WACC is 11.2 percent, and the tax rate is 35 percent. a. If Kose’s cost of equity is 15 percent, what is its pretax cost of debt? b. If instead you know that the ...Levered, Inc., and Unlevered, Inc., are identical in every way except their capital structures. Each company expects to earn $275,000 before interest per year in perpetuity, with each company distributing all its earnings as ...Post your question

0