Forward Rate. a. Assume that as of today, the annualized two-year interest rate is 0.14 , while the one-year interest rate is 0.02.
b. Assume that the liquidity premium on a two-year security is 0.002. Use this information to re-estimate the one-year forward rate. Enter the answer in decimal form using 4 decimals (e. g. 0.1234)

Consider the following information on stocks a, b, c and their returns (in decimals) in each state: state prob. of state a b c boom 20% 0.27 0.22 0.16 good 45% 0.16 0.09 0.07 poor 25% 0.03 0 0.03 bust 10% -0.08 -0.04 -0.02 if your portfolio is invested 25% in a, 40% in b, and 35% in c, what is the standard deviation of the portfolio in percent? answer to two decimals, carry intermediate calcs. to at least four decimals.