Approximate-exact expected real risk premiums on portfolio

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Reference no: EM13923988

Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .20 .34 .46 .50 Normal .40 .25 .23 .20 Bust .40 .03 −.25 −.42 If your portfolio is invested 35 percent each in A and B and 30 percent in C, what is the portfolio expected return? What is the variance? What is the standard deviation? If the expected T-bill rate is 4.50 percent, what is the expected risk premium on the portfolio? If the expected inflation rate is 4.00 percent, what are the approximate and exact expected real returns on the portfolio? What are the approximate and exact expected real risk premiums on the portfolio?

Reference no: EM13923988

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