If the expected t-bill rate is 44 percent what is the

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Reference no: EM13573810

Consider the following information on a portfolio of three stocks:

State of
Economy
Probability of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
  Boom .14 .05 .35 .47
  Normal .52 .13 .25 .23
  Bust .34 .19 -.24 -.38

Required:
(a)

If your portfolio is invested 42 percent each in A and B and 16 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? (Do not round intermediate calculations. Round your variance answer to 5 decimal places (e.g., 32.16161) and input your other answers as a percentage rounded to 2 decimal places (e.g., 32.16).)



  Expected return %  
  Variance       
  Standard deviation %  

(b)

If the expected T-bill rate is 4.4 percent, what is the expected risk premium on the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Expected risk premium %  

Reference no: EM13573810

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