Consider the following information about three stocks:

Rate of Return if State Occurs State ofProbability of EconomyState of EconomyStock AStock BStock C Boom .25 .30 .42 .54 Normal .45 .12 .10 .08 Bust .30 .03 -.24 -.44

**a**–**1.**If your portfolio is invested 45 percent each in A and B and 10 percent in C, what is the portfolio expected return? **(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)**

Portfolio expected return %

**a**–**2.**What is the variance? **(Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)**

Variance

**a**–**3.**What is the standard deviation? **(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)**

Standard deviation %

**b.**If the expected T-bill rate is 3.20 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.)**

Expected risk premium %

**c**–**1.**If the expected inflation rate is 2.80 percent, what are the approximate and exact expected real returns on the portfolio? **(Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)**

Approximate expected real return % Exact expected real return %

**c-2.**What are the approximate and exact expected real risk premiums on the portfolio? **(Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)**

Approximate expected real risk premium % Exact expected real risk premium %

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