# 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.)

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 _______ %