Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Consider the following information on three stocks.

Rate of Return if State Occurs

State of economy Probability of state of economy Stock A Stock B Stock C

Boom 0.5 0.2 0.35 0.6

Normal 0.3 0.15 0.12 0.05

Bust 0.2 0.01 -0.25 -0.5

a. If your portfolio is invested 40% each in A and C, and 20% in B, what is the portfolio expected return?

b. What is the variance of this portfolio?

c. What is the standard deviation of this portfolio?

d. If the expected T-Bill rate is 5%, what is the expected risk premium on the portfolio?

e. If the expected inflation rate is 2.50%, what are the approximate and exact expected real returns on the portfolio?

f. If the expected T-Bill rate is 5% and the expected inflation rate is 2.50%, what are the approximate and exact expected real risk premiums on the portfolio?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M938201

Have any Question? 


Related Questions in Basic Finance

1 how would you define or describe the concept of culture2

1. How would you define or describe the concept of culture? 2. How is the research of Trompenaars similar to or different from that of Hofstede? 3. What do you consider to be the most important factors of culture in term ...

The net present value method and the internal rate of

The net present value method and the internal rate of return method may produce different decisions when selecting among mutually exclusive projects. What is the source of this conflict? A shoe manufacturer is considerin ...

Suppose that daimler ag which manufacturers mercedes-benz

Suppose that Daimler AG, which manufacturers Mercedes-Benz automobiles, sells 5 million worth of automobiles to U.S. importers. If the current exchange rate is $1.22 = 1, and Daimler agrees to accept payment of $6.1 mill ...

What factors would determine whether a particular strategy

What factors would determine whether a particular strategy is a hedge or a speculative strategy? How are spread and arbitrage strategies forms of speculation? How can they be interpreted as hedges? What are the differenc ...

How does a conversion provision on a debt obligation

How does a conversion provision on a debt obligation provide an option to the investor? If the yield on a Treasury security is 3% and that of a similar-maturity municipal bond is 2.5%, what is the muni-Treasury yield rat ...

Comet pasta company stock currenly sells for 13750 per

Comet Pasta Company stock currenly sells for $137.50 per share. The Company JUST PAID a dividend and that dividend is not expected to grow at all for the next two years, and then it will grow at a constant rate of 10 per ...

1 an anonymous billionaire investor was quoted in the wall

1. An anonymous billionaire investor was quoted in the Wall Street Journal as asking: "Has there ever been a carry trade that hasn't ended badly?" What is a carry trade? Why might it end badly? 2. Interest rates on U.S. ...

If you receive 15000 today and can invest it at a 5 annual

If you receive $15,000 today and can invest it at a 5% annual rate compounded continuously, what will be your ending value after 20 years?

1 what is the price of an 7 bond with 10 years to maturity

1) What is the price of an 7% bond with 10 years to maturity that is trading at a yield of 7%? Assume the face value is $1000 and coupon is paid semi-annually.(Keep your answer to 2 decimal places.) 2) What is the modifi ...

Black hill inc sells 100 million worth of 27-year to

Black hill inc. sells $100 million worth of 27-year to maturity 10.81% annual coupon bonds. the net proceeds (proceeds after flotation costs) are $975 for each $1000 bond. What is the before tax cost of capital for this ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen