TABLE 1. Fim Portfolio Data - Expedad retuns on component stocks (%) in function of the state of the cconomy State of the Probability of State of Rate of Return (%) for cach State of the Economy...

Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio comprises three stocks. It is invested 50 percent in stock A, 30 percent in stock B and 20 percent in stock C.

(a) Determine what is the portfolio’s expected return.

(b) Determine the portfolio’s variance and standard deviation.

(c) Assume that the expected risk-free rate is 2.75 percent. Determine the expected risk premium on the portfolio.

Extracted text: TABLE 1. Fim Portfolio Data - Expedad retuns on component stocks (%) in function of the state of the cconomy State of the Probability of State of Rate of Return (%) for cach State of the Economy Economy the Economy Stock A Stock B Stock C Good 60.00% 3.00% 34.00% 70.00% Роог 40.00% 15.00% -12.00% -35.00%