User Account

All Pages

If the expected t-bill rate is 5 and the expected inflation

Assignment Help Finance Basics
Reference no: EM13567520

Consider the following information on three stocks.

                               Rate of Return if State Occurs
State of economy   Probability of state of economy   Stock A   Stock B    Stock C
Boom                                 0.5                                    0.2       0.35          0.6
Normal                               0.3                                  0.15       0.12        0.05
Bust                                   0.2                                  0.01      -0.25         -0.5

a. If your portfolio is invested 40% each in A and C, and 20% in B, what is the portfolio expected return?

b. What is the variance of this portfolio?

c. What is the standard deviation of this portfolio?

d. If the expected T-Bill rate is 5%, what is the expected risk premium on the portfolio?

e. If the expected inflation rate is 2.50%, what are the approximate and exact expected real returns on the portfolio?

f. If the expected T-Bill rate is 5% and the expected inflation rate is 2.50%, what are the approximate and exact expected real risk premiums on the portfolio?

Reference no: EM13567520

Questions Cloud

Some accountants argue that variances should be written off : some accountants argue that variances should be written off directly to cost of goods sold. regardless of materiality
Discuss platos distinction of two types of knowledge how : 1. discuss platos distinction of two types of knowledge. how does the doctrine of the forms provide for scientific
You own a portfolio that has 700 invested in alpha ltd and : you own a portfolio that has 700 invested in alpha ltd and 2 500 invested in better ltd. if the expected returns on
Velway corp acquired joker inc on january 1 2009 the parent : velway corp. acquired joker inc. on january 1 2009. the parent paid more than the fair value of the subsidiarys net
If the expected t-bill rate is 5 and the expected inflation : consider the following information on three
The 2009 balance sheet of annas tennis shop ltd showed : the 2009 balance sheet of annas tennis shop ltd showed current assets of 840 and current liabilities of 320. the 2010
Crock hunters wishes to maintain a growth rate of 8 a year : crock hunters wishes to maintain a growth rate of 8 a year a debt-equity ratio of 0.45 and a dividend payout ratio of
Write a business memo format is in the second document of : introduction having the ability to effectively communicate is one of the most important skills a business executive can
What is the portfolio expected return and the portfolio : 1 use the following information to answer the questions below.securitynbspnbspnbspnbspnbsp

Reviews

Write a Review

Finance Basics Questions & Answers

  Economic exposure,transaction exposure ,translation exposure

These are possible exposure: 1.Economic exposure 2.Transaction exposure 3. Translation exposure

  Analyzing the past monthly movements in ibm''s stock price

Analyze the past monthly movements in IBM's stock

  Andrea made the following gifts

Andrea made the following gifts

  Which should be reflect in the yield on treasury securities

which should be reflected in the yield on Treasury securities that are not indexed to the rate of inflation.

  What is the net present value of this project

The tax rate is 35%. Your estimated cost of capital is 10%. What is the net present value of this project?

  Writenbspa 850 -word paper in which you cover the

writenbspa 850 -word paper in which you cover the municipality as a whole combine concepts from the class as well as

  What is the amount of net fixed assets

ABC Company has net working capital of $2,612, current assets of $9,741, long-term debt of $2,652, and equity of $3,926. What is the amount of net fixed assets?

  What is the after-tax salvage value

If the lathe can be sold for $4,800 at the end of year 3, what is the after-tax salvage value?

  Create an amortization schedule

Johnson Enterprises borrowed $100,000 on July 1, 2003 to finance the purchase of a building. The mortgage needs payments of $3225 to be made at the end of every quarter for fifteen years.

  Discuss the interlocking connections

Discuss and explain the interlocking connections among 3 primary financial statements and explain why conventional reporting of financial data does not provide complete information upon which financial decisions can be made.

  Find the appropriate value

The Family Practice Clinic has long-term debt of 567,000 dollar as of December 31, 2009 determine the equivalent value of long-term debt in 2005.

  Accounting and time value of money

Computation of Future Values and Present Values by using the appropriate interest table, answer each of the following questions.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd