Problem 13-23 Portfolio Returns and Deviations [LO2] Consider the following information about three stocks: Rate...
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Problem 13-23 Portfolio Returns and Deviations [LO2] Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .25 .34 .46 .58 Normal .50 .14 .12 .10 Bust .25 .05 ?.26 ?.46 c-1 If the expected inflation rate is 3.00 percent, what are the approximate and exact expected real returns on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate expected real return 7.35 % Exact expected real return 7.14 % c-2 What are the approximate and exact expected real risk premiums on the portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate expected real risk premium 6.04 % Exact expected real risk premium 2.21 %
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