What is the expected risk premium on the portfolio

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Reference no: EM131321500

Consider the following information on a portfolio of three stocks: State of Probability of Stock A Stock B Stock C Economy State of Economy Rate of Return Rate of Return Rate of Return Boom .12 .07 .32 .45 Normal .55 .15 .27 .25 Bust .33 .16 − .26 − .35 a. If your portfolio is invested 40 percent each in A and B and 20 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. Enter your other answers as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % Variance Standard deviation % b. If the expected T-bill rate is 4.5 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.) Expected risk premium %

Reference no: EM131321500

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