Consider the following information: 


Rate of Return If State Occurs 
State of 
Probability of 

Economy 
State of Economy 
Stock A 
Stock B 
Recession 

.22 


.07 

− 
.22 

Normal 

.52 


.10 


.07 

Boom 

.26 


.15 


.24 


Calculate the expected return for each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 

Expected return 
Stock A 
% 
Stock B 
% 

Calculate the standard deviation for each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 

Standard deviation 
Stock A 
% 
Stock B 
% 

You own a stock portfolio invested 35 percent in Stock Q, 30 percent in Stock R, 20 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .92, 1.25, 1.09, and 1.27, respectively. What is the portfolio beta? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) 
A stock has an expected return of 15.5 percent, its beta is 1.55, and the expected return on the market is 12.2 percent. What must the riskfree rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 
Stock Y has a beta of 1.0 and an expected return of 12.4 percent. Stock Z has a beta of .6 and an expected return of 8.2 percent. If the riskfree rate is 5.2 percent and the market risk premium is 6.4 percent, the rewardtorisk ratios for stocks Y and Z are and percent, respectively. Since the SML rewardtorisk is percent, Stock Y is and Stock Z is . (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
You want to create a portfolio equally as risky as the market, and you have $1,200,000 to invest. Given this information, fill in the rest of the following table: (Do not round intermediate calculations. Round your answers to the nearest whole number, e.g., 32.) 
Asset 
Investment 
Beta 
Stock A 
$ 156,000 

1.20 

Stock B 
$ 276,000 

1.40 

Stock C 
$ 

1.50 

Riskfree asset 
$ 




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