Consider the following information about three stocks:Rate of Return If State OccursProbability of Stateof Economy.25State of EconomyStock AStock BStock CВoom.13.29.60Normal.60.08.11.13Bust.15.02-18-45a-1.lf your portfolio is invested 40 percent each in A and B and 20 percent in C, what isthe portfolio expected return? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)a- What is the variance? (Do not round intermediate calculations and round2. your answer to 5 decimal places, e.g., .16161.)a- What is the standard deviation? (Do not round intermediate calculations and enter3. your answer as a percent rounded to 2 decimal places, e.g., 32.16.)b. If the expected T-bill rate is 3.70 percent, what is the expected risk premium on theportfolio? (Do not round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)c-1. If the expected inflation rate is 3.30 percent, what are the approximate and exactexpected real returns on the portfolio? (Do not round intermediate calculations andenter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)c- What are the approximate and exact expected real risk premiums on the portfolio?2. (Do not round intermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)a-1. Portfolio expected return%a-2. Variancea-3. Standard deviation%b. Expected risk premiumc-1. Approximate expected real return%c-1. Exact expected real returnc-2. Approximate expected real risk premium%c-2. Exact expected real risk premium%

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Consider the following information about three stocks: Rate of Return If State Occurs Probability of State of Economy TITI State of Economy Stock A Stock B Stock C Вoom .25 .13 .29 .60 Normal .60 .08 .11 .13 Bust .15 .02 -18 -45 a-1.lf 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- What is the variance? (Do not round intermediate calculations and round 2. your answer to 5 decimal places, e.g., .16161.)

Consider the following information about three stocks: Rate of Return If State Occurs Probability of State of Economy TITI State of Economy Stock A Stock B Stock C Вoom .25 .13 .29 .60 Normal .60 .08 .11 .13 Bust .15 .02 -18 -45 a-1.lf 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- What is the variance? (Do not round intermediate calculations and round 2. your answer to 5 decimal places, e.g., .16161.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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.25.13.29.60 Normal .60.08.11.13 Bust.15.02.18-.45 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.) b. If the expected T-bill rate is 3.70 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 3.30…
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