Consider the following information on a portfolio of three stocks: State of Probability of Stock A...
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Consider the following information on a portfolio of three stocks: State of Probability of Stock A Rate of Economy State of Economy Return Boom Normal Bust .14 .51 .35 .11 Stock B Rate of Return .36 Stock C Rate of Return .51 .19 .21 .29 .20 -.20 -.39 a. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? Note: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If the expected T-bill rate is 4.2 percent, what is the expected risk premium on the portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Expected return Variance Standard deviation b. Expected risk premium % % % Consider the following information on a portfolio of three stocks: State of Probability of Stock A Rate of Economy State of Economy Return Boom Normal Bust .14 .51 .35 .11 Stock B Rate of Return .36 Stock C Rate of Return .51 .19 .21 .29 .20 -.20 -.39 a. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? Note: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If the expected T-bill rate is 4.2 percent, what is the expected risk premium on the portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Expected return Variance Standard deviation b. Expected risk premium % % %
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