Comparing Stocks

Sigchi4life
Category:
Business & Finance
Price: $20 USD

Question description


 State of Economy

Probability of State of Economy

 


Stock A

Stock B

Stock C

 Boom

.2

.24

.36 .58








 Normal

.5

.20

.18 .16








 Bust

.3

.04

-.36 -.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 decimal places, e.g., 32.16.)

 Portfolio expected return

 %  

a-2

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

 Variance

a-3

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

 Standard deviation

 %  

b.

If the expected T-bill rate is 4.00 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 Expected risk premium

 %  

c-1

If the expected inflation rate is 3.60 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

 Approximate expected real return

 %  

 Exact expected real return

 %  

c-2

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

 Approximate expected real risk premium

 %  

 Exact expected real risk premium

 %  



Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UT Austin
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