Portfolio returns and deviations consider the following, Ask an Expert

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Portfolio returns and deviations. Consider the following information on a portfolio of three stocks:

State of Probability of Stock A Rate of return Stock B ROR Stock C ROR

Economy State of Economy

Boom .15 .02 .32 .60

Normal .60 .10 .12 .20

Bust .25 .16 -.11 -.35

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? the standard deviation?

b. if the expected T-bill is 3.75 percent, what is the expected risk premium on the portfolio?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93042773

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