Consider the following information about three stocks: State of Economy Probability of State of Economy Rate...
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Consider the following information about three stocks: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom Normal 0.29 0.40 0.28 0.40 0.52 0.11 0.09 0.07 Bust 0.35 0.02 -0.22 -0.42 e-1. If your portfolio is invested 35% each in A and B and 30% in C. what is the portfolio expected return? (Do not round Intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return % e-2. What is the variance? (Do not round Intermediate calculations. Round the final answer to a decimal places.) Variance e-3. What is the standard deviation? (Do not round Intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation b. If the expected T-bill rate is 3.20%, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium c-1. If the expected inflation rate is 2.10%, what are the approximate and exact expected real returns on the portfolio? (Do not round Intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real return 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 the answers as a percent rounded to 2 decimal places.) Approximate expected real risk premium Exact expected real risk premium Consider the following information about three stocks: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom Normal 0.29 0.40 0.28 0.40 0.52 0.11 0.09 0.07 Bust 0.35 0.02 -0.22 -0.42 e-1. If your portfolio is invested 35% each in A and B and 30% in C. what is the portfolio expected return? (Do not round Intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return % e-2. What is the variance? (Do not round Intermediate calculations. Round the final answer to a decimal places.) Variance e-3. What is the standard deviation? (Do not round Intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Standard deviation b. If the expected T-bill rate is 3.20%, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decimal places.) Expected risk premium c-1. If the expected inflation rate is 2.10%, what are the approximate and exact expected real returns on the portfolio? (Do not round Intermediate calculations. Enter the answers as a percent rounded to 2 decimal places.) Approximate expected real return 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 the answers as a percent rounded to 2 decimal places.) Approximate expected real risk premium Exact expected real risk premium
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Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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