If your portfolio is invested 36 percent each in A and B and 28 percent in C, th

Question

If your portfolio is invested 36 percent each in A and B and 28 percent in C, the portfolio expected return is _____ percent (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)). The variance is _______ (Round your answer to 4 decimal places. (e.g., 32.1616)) and standard deviation is _____ percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

If the expected T-bill rate is 3.8 percent, the expected risk premium on the portfolio is ____percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)

If the expected inflation rate is 3.6 percent, the approximate and exact expected real returns on the portfolio are _____ percent and _____ percent, respectively. The approximate and exact expected real risk premiums on the portfolio are ____ percent and ____ percent, respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Portfolio Expected Return Stock A = .15*.45+.1*.5+.04*.05 = .1195 Stock B= .55*.45+.25*.5-.01*.05=.739 Stock C= .45*.45+.03*.5-.05*.05=.215 Portfolio Return= .1195*36%+.739*36%+.215*28% = .36926 Portfolio Expected Return = 36.93%

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