Unformatted text preview: Fows are forecasted in real terms. The real opportunity cost of capital is 8 percent. Should you try to persuade the president to allow other oﬃcers to use the plane? Problem 4: Consider the following rate of returns: State of Economy Probability of state of economy Stock A Stock B Stock C Boom 0.30 0.30 0.45 0.33 Good 0.40 0.12 0.10 0.15 Poor 0.25 0.01-0.15-0.05 Bust 0.05-0.06-0.30-0.09 Your portfolio is invested 30% each in A and C, and 40% in B. What is the expected return of the portfolio?...
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This note was uploaded on 02/12/2012 for the course UGBA 101A taught by Professor Mccullough during the Spring '08 term at Berkeley.
- Spring '08