Consider the following information about three stocks: Rate of Return if State Occurs Probability of State...
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Consider the following information about three stocks: Rate of Return if State Occurs Probability of State State of Economy of Economy Stock A Stock B Stock C Boom Normal .20 .26 .38 .50 Bust .50 .30 .10 .08 .06 .01 -.20 -.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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) a-3. What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the expected T-bill rate is 3.00 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. If the expected inflation rate is 2.60 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-2. What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. Portfolio expected return a-2. Variance 5.23 % 0.04517 a-3. Standard deviation % b. Expected risk premium % c-1. Approximate expected real return % c-1. Exact expected real return % c-2. Approximate expected real risk premium % c-2. Exact expected real risk premium % Consider the following information about three stocks: Rate of Return if State Occurs Probability of State State of Economy of Economy Stock A Stock B Stock C Boom Normal .20 .26 .38 .50 Bust .50 .30 .10 .08 .06 .01 -.20 -.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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) a-3. What is the standard deviation? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the expected T-bill rate is 3.00 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. If the expected inflation rate is 2.60 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-2. What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. Portfolio expected return a-2. Variance 5.23 % 0.04517 a-3. Standard deviation % b. Expected risk premium % c-1. Approximate expected real return % c-1. Exact expected real return % c-2. Approximate expected real risk premium % c-2. Exact expected real risk premium %
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Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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