Consider the following information on a portfolio of three stocks:State of Probability of State Stock A Rate ofEconomyof EconomyReturn.02Boom15Normal55Bust3016a. Expected returnVarianceStandard deviationb. Expected risk premiumStock B Rate ofReturn%32%%-.11a. 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?Stock C Rate ofReturnNote: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your otheranswers as a percent rounded to 2 decimal places, e.g., 32.16.b. If the expected T-bill rate is 3.75 percent, what is the expected risk premium on the portfolio?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16..6020-.35

Optimal portfolio consists of the combination of the debt and equity component for generating funds…

Consider the following information on a portfolio of three stocks: State of Probability of State Stock A Rate of Economy of Economy Return Boom .15 .02 Normal .55 Bust .30 .10 .16 a. Expected return Variance Stock B Rate of Return .32 .12 -.11 % Stock C Rate of Return 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? .60 .20 -.35 Note: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your othe answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If the expected T-bill rate is 3.75 percent, what is the expected risk premium on the portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Consider the following information on a portfolio of three stocks: State of Probability of State Stock A Rate of Economy of Economy Return Boom .15 .02 Normal .55 Bust .30 .10 .16 a. Expected return Variance Stock B Rate of Return .32 .12 -.11 % Stock C Rate of Return 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? .60 .20 -.35 Note: Do not round intermediate calculations. Round your variance answer to 5 decimal places, e.g., .16161. Enter your othe answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If the expected T-bill rate is 3.75 percent, what is the expected risk premium on the portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 1Q

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