Question: please help with A&B Problem 11-25 Portfolio Returns and Deviations [LO 2] Consider the following information on a portfolio of three stocks: State of Economy
Problem 11-25 Portfolio Returns and Deviations [LO 2] Consider the following information on a portfolio of three stocks: State of Economy Boom Normal Bust Probability of State of Economy .15 Stock A Rate of Return .10 18 Stock B Rate of Return .35 .20 -19 Stock C Rate of Return .52 .28 -38 52 .33 .19 Required: (a) If your portfolio is invested 42 percent each in A and B and 16 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? (Do not round intermediate calculations. Round your variance answer to 5 decimal places (e.g., 32.16161) and input your other answers as a percentage rounded to 2 decimal places (e.g., 32.16).) 12.71 % Expected return Variance Standard deviation (b) If the expected T-bill rate is 4.15 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Expected risk premium
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