Question

Consider the following information about three stocks: |

Rate of Return If State Occurs | ||||||||||||

State of | Probability of | |||||||||||

Economy | State of Economy | Stock A | Stock B | Stock C | ||||||||

Boom | .30 | .36 | .48 | .60 | ||||||||

Normal | .40 | .15 | .13 | .11 | ||||||||

Bust | .30 | .06 | −.28 | −.48 | ||||||||

a-1. |
If your portfolio is invested 25 percent each in A and B and 50
percent in C, what is the portfolio expected return? |

a-2. |
What
is the variance? (Do not round intermediate calculations
and round your answer to 5 decimal places, e.g.,
.16161.) |

a-3. |
What
is the standard deviation? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.) |

b. |
If
the expected T-bill rate is 3.50 percent, what is the expected risk
premium on the portfolio? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.) |

c-1. |
If
the expected inflation rate is 3.10 percent, what are the
approximate and exact expected real returns on the portfolio?
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.) |

c-2. |
What
are the approximate and exact expected real risk premiums on the
portfolio? (Do not round intermediate calculations and
enter your answers as a percent rounded to 2 decimal places, e.g.,
32.16.) |

Answer #1

consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.25
.30
.42
.54
Normal
.45
.12
.10
.08
Bust
.30
.03
−.24
−.44
a-1.
If your portfolio is invested 45 percent each in A and B and 10
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations and enter your answer as a
percent...

Consider the following information about three stocks: Rate of
Return If State Occurs State of Probability of Economy State of
Economy Stock A Stock B Stock C Boom .20 .24 .36 .55 Normal .55 .17
.13 .09 Bust .25 .00 −.28 −.45 a-1 If your portfolio is invested 40
percent each in A and B and 20 percent in C, what is the portfolio
expected return? (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2...

Consider the following information about three stocks:
State of Probability of Economy State of Economy Stock A Stock B
Stock C Boom .25 .34 .46 .58 Normal .50 .14 .12 .10 Bust .25 .05
−.26 −.46 a-1. If your portfolio is invested 20 percent each in A
and B and 60 percent in C, what is the portfolio expected return?
(Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.) a-2....

Consider the following information about three stocks:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
0.20
0.24
0.36
0.58
Normal
0.50
0.20
0.18
0.16
Bust
0.30
0.04
?0.36
?0.45
a-1
If your portfolio is invested 40 percent each in A and B and 20
percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter the answer as a percent
rounded...

Consider the following information on three
stocks:
Rate of Return If State OccursState of
EconomyProbability of State
of EconomyStock AStock BStock CBoom
.20 .20 .32 .54 Normal
.45 .18 .16 .14 Bust
.35 .02 −.34 −.42
a-1 If your portfolio is invested 40 percent each in A and B
and 20 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...

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.10
.35
.40
.27
Good
.60
.16
.17
.08
Poor
.25
−
.01
−
.03
−
.04
Bust
.05
−
.12
−
.18
−
.09
a.
Your portfolio is invested 30 percent each in A and C, and 40
percent in B. What is the expected return of the portfolio?
(Do not round...

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.10
.35
.40
.27
Good
.60
.16
.17
.08
Poor
.25
−
.01
−
.03
−
.04
Bust
.05
−
.12
−
.18
−
.09
a.
Your portfolio is invested 30 percent each in A and C, and 40
percent in B. What is the expected return of the portfolio?
(Do not round...

Consider the following information: Rate of Return if State
Occurs State of Probability of Economy State of Economy Stock A
Stock B Stock C Boom .10 .35 .40 .27 Good .60 .16 .17 .08 Poor .25
− .01 − .03 − .04 Bust .05 − .12 − .18 − .09 a. Your portfolio is
invested 30 percent each in A and C, and 40 percent in B. What is
the expected return of the portfolio? (Do not round intermediate
calculations...

***I ONLY NEED C2 ANSWERED PLEASE**
Consider the following information on three
stocks:
Rate of Return If State OccursState of
EconomyProbability of State
of EconomyStock AStock BStock CBoom .20 .20 .32 .54 Normal .45 .18
.16 .14 Bust .35 .02 −.34 −.42
a-1 If your portfolio is invested 40 percent each in A and B
and 20 percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded to 2...

Consider the following information:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.15
.33
.43
.23
Good
.55
.18
.14
.12
Poor
.25
−.05
−.08
−.06
Bust
.05
−.13
−.18
−.10
a.
Your portfolio is invested 26 percent each in A and C, and 48
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your
answer...

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