Comparing Stocks

Anonymous

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.)
 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 %

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