Question: Please show equations & work!! Q1. (40 points) Consider the following information about three stocks: State of Probabilitv economy of state of economy Rate of

Please show equations & work!!

Please show equations & work!! Q1. (40 points) Consider the following information

Q1. (40 points) Consider the following information about three stocks: State of Probabilitv economy of state of economy Rate of return if state occurs Stock A Stock B Stock C 0.55 0.09 0.45 0.21 0.33 0.11 0.21 Boom 0.25 Normal 0.6 0.17 Bust 0.15 If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio expected return? If the expected T-bill rate is 3.80 percent, what is the expected risk premium on the portfolio a. b

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