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I have the expected return calculation right, but my other answers are wrong. Ca

ID: 2645609 • Letter: I

Question


I have the expected return calculation right, but my other answers are wrong. Can someone please let me know the variance and standard deveation?   As well as the expected risk premium in question b at the bottom.  

Consider the following information on a portion of three stocks. Required: If your portfolio is invested 40 percent each in A and B and 20 percent in C. what is the portfolio's expected return, the variance, and the standard deviation? (Do not round intermediate calculations. Round your variance answer to 5 decimal places (e.g., 32.16161) and input your other answers as a percentage rounded to 2 decimal places (e.g., 32.16).) If the expected T-bill rate is 4.25 percent. what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

State of Economy Probability Staock A Return Staock B Return Staock C Return Boon 0.13 0.02 0.32 0.5 Normal 0.55 0.1 0.22 0.2 Worst 0.32 0.16 -0.21 -0.35 10.88% 9.54% 6.30% Weights 0.4 0.4 0.2 Expected Return {E} 9.43% Variance = Wa*(Ra - E)^2 + Wb*(Rb - E)^2 + Wc*(Rc - E)^2 0.0002805 Standard Deviation = Square root of Variance 1.67% Market Risk Premium = Expected market return