Problem 13-23 Portfolio Returns and Deviations [LO2] Consider the following information about three stocks: State of Economy Boom Normal Bust Probability of State- of Economy 26 .50 24 a-1. If your portfolio is invested 40 percent each in A and B and 20 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.) If the expected T-bill rate is 3.30 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 2.90 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.) 8-1. Portfolio expected return a-2. Variance 8-3. Standard deviation Rate of Return if State Occurs Stock A Stock B Stock C 32 44 56 13 11 .09 04 -.25 -.45 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 % % % %6 % %

Problem 13-23 Portfollo Returns and Devlatlons [LO2] Consider the following informstion sbout three stocks: a-1. If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio expected return? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 3216.) a-2. Whot is the varisnce? (Do not round Intermediate calculations and round your answer to 5 decimal places, e.g.,.16161) a.3. What is the stondord devistion? (Do not round intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the expected T-bill rote is 3.30 percent, whst is the expected riak 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 infotion rote is 290 percent, whst ore the opproximste ond exoct expected real retums on the porfolio? (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal piaces, e.g., 3216.) c.2 What are the spproximste and exact expected real risk premiums on the portfolio? (Do not round intermedlate calculations and enter your answers as a percent rounded to 2 declmal places, e.g., 32.16.)