Pete Pablo has $20,000 to invest. He is very optimistic about the prospects of two companies, 919
Question:
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a. Pete decides to purchase 210 shares of 919 Brands and 180 shares of Diaries.com. What is the expected return on this portfolio? Can Pete construct this portfolio with the amount of money he has to invest?
b. If Pete sells short 100 shares of Lloyd Bank, how much additional money will he have to invest in the other two stocks?
c. If Pete buys 210 shares of 919 Brands and 180 shares of Diaries.com, and he simultaneously short sells 100 shares of Lloyd Bank, what are the resulting portfolio weights in each stock?
d. What is the expected return on the portfolio described in part (c.)?
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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a Dollars invested in 919 Brands 210 X 60 12600 Dollars invested in Diariescom 180 X 80 14400 Tot...View the full answer
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Related Book For 
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
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