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Type or paste question here Consider the following information on a portfolio of three stocks: State...

Type or paste question here

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 .13 .04 .34 .58
  Normal .53 .12 .14 .22
  Bust .34 .18 –.13 –.37
a.

If your portfolio is invested 36 percent each in A and B and 28 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.)

b. If the expected T-bill rate is 3.85 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.)
a. Expected return %
Variance
Standard deviation %
b. Expected risk premium %

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