# write my assignment 26709

Consider the following information on three stocks:

__Rate of Return If State Occurs_______

State of Economy Probability of State

of Economy Stock A Stock B Stock C

Boom .25 .32 .44 .60

Normal .40 .24 .22 .20

Bust .35 .02 −.24 −.40

a-1 If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Portfolio expected return ________ %

a-2 What is the variance? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

Variance __________

a-3 What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation ________%

b. If the expected T-bill rate is 4.40 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected risk premium ________%

c-1 If the expected inflation rate is 4.00 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Approximate expected real return _____%

Exact expected real return _______%

c-2 What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Approximate expected real risk premium ______ %

Exact expected real risk premium _______ %