If your portfolio is invested 40 percent each in A and B and 20 percent in C, wh

Question

If your portfolio is invested 40 percent each in A and B and 20 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 4.60 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 4.10 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 Probability of   Economy State of Economy Stock A Reurn Stock B Return Stock C   Boom 0.25 0.36 0.09 0.48 0.12 0.52 0.13   Normal 0.44 0.2 0.088 0.15 0.066 0.12 0.0528   Bust 0.31 0.04 0.0124 0.26 0.0806 0.44 0.1364 0.1904 0.2666 0.3192 Expected Return= Return/3 Stock A = .1904/3 0.064 0.0128 0.0176 0.0212 Stock B .2666/3 0.088 Stock C .3192/3 0.106 Portfolio Return .064*40%+.088*20%+.106*20% 0.0516 Portfolio Return = .0516

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects