State of Economy Boom Normal Bust Probability of State of Economy 0.20 0.50 0.30 Variance Rate of Return if State Occurs Stock C 0.50 0.06 -0.40 Stock A 0.26 0.10 0.01 a-1. If your portfolio is invested 30% each in A and B and 40% in C, what is the portfolio expected return? (C calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return a-2. What is the variance? (Do not round intermediate calculations. Round the final answer to 8 decimal % Stock B 0.38 0.08 -0.20 % -3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a perc places.) Standard deviation D. If the expected T-bill rate is 3.10%. what is the expected risk premium on the portfolio? (Do not round in Enter the answer as a percent rounded to 2 decimal places.)
State of Economy Boom Normal Bust Probability of State of Economy 0.20 0.50 0.30 Variance Rate of Return if State Occurs Stock C 0.50 0.06 -0.40 Stock A 0.26 0.10 0.01 a-1. If your portfolio is invested 30% each in A and B and 40% in C, what is the portfolio expected return? (C calculations. Enter the answer as a percent rounded to 2 decimal places.) Portfolio expected return a-2. What is the variance? (Do not round intermediate calculations. Round the final answer to 8 decimal % Stock B 0.38 0.08 -0.20 % -3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a perc places.) Standard deviation D. If the expected T-bill rate is 3.10%. what is the expected risk premium on the portfolio? (Do not round in Enter the answer as a percent rounded to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:State of
Economy
Boom
Normal
Bust
Variance
Probability of
State of Economy
0.20
0.50
0.30
Standard deviation
Firm
Stock A
0.26
0.10
0.01
a-1. If your portfolio is invested 30% each in A and B and 40% in C, what is the portfolio expected return? (Do not round intermediat
calculations. Enter the answer as a percent rounded to 2 decimal places.)
Portfolio expected return
a-2. What is the variance? (Do not round intermediate calculations. Round the final answer to 8 decimal places.)
Rate of Return if State Occurs
Stock C
0.50
0.06
-0.40
STOCKS
a-3. What is the standard deviation? (Do not round intermediate calculations. Enter the answer as a percent rounded to 2 decime
places.)
%
Stock B
0.38
0.08
-0.20
b. If the expected T-bill rate is 3.10%, what is the expected risk premium on the portfolio? (Do not round intermediate calculations.
Enter the answer as a percent rounded to 2 decimal places.)
0/
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