If your portfolio is invested 25 percent each in A and B and 50 percent in C, wh

Question

If your portfolio is invested 25 percent each in A and B and 50 percent in C, what is the portfolio expected return? (Round your answer to 2 decimal places. (e.g., 32.16))

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

What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the expected T-bill rate is 3.50 percent, what is the expected risk premium on the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))

If the expected inflation rate is 3.10 percent, what are the approximate and exact expected real returns on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

What are the approximate and exact expected real risk premiums on the portfolio? (Round your answers to 2 decimal places. (e.g., 32.16))

Explanation / Answer

State of Economy Probability Stock A Stock B Stock C Boom 0.3 0.36 0.48 0.6 Normal 0.4 0.15 0.13 0.11 Bust 0.3 0.06 0.28 0.48 Return with Probabilty 0.186 0.28 0.368 Expecetd Return=0.25*(0.186+0.28)+0.5*0.368 0.3005 30%

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