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Lesson #6, Assignment #4

# Lesson #6, Assignment #4 - 12.32 c Approximate expected...

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Chapter 13 Question 23 Input area: State Probability Stock A Stock B Stock C Boom 0.35 0.24 0.36 0.55 Normal 0.35 0.17 0.13 0.09 Bust 0.15 0.00 (0.28) (0.45) weights 0.40 0.40 0.20 b. T-bill rate 3.80% c. Inflation rate 3.50% Output area: a. State Probability Product Product Boom 0.35 0.350 0.3500 0.1612 0.03560 0.01 Poor 0.35 0.138 0.5000 0.1612 (0.00050) 0 Bust 0.15 (0.202) 0.1500 0.1612 0.13190 0.02 E(R) = 0.1612 Variance = 0.32530 Standard Deviation 18.04% b. Expected risk premium

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Unformatted text preview: 12.32% c. Approximate expected real return 12.62% Exact expected real return 12.19% Approximate expected real risk premium 12.32% Exact expected real risk premium 11.90% Portfolio Return Return Deviation Squared Deviation Chapter 13 Question 27 Input area: Beta Expected return Pete 1.35 13.20% Repete 0.80 10.10% Output area: Risk-free rate 5.59% Market return With Pete 11.23% With Repete 11.23%...
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Lesson #6, Assignment #4 - 12.32 c Approximate expected...

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