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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