$3-$ Suppose you had $$100,000$ in investments at the beginning of the year that consisted of a

diversified portfolio of stocks $(60$ percent$)$ and bonds $(40$ percent$).$ The returns over the past $12$

months were $17$ percent on stocks and $8$ percent on bonds.

a$)$ What is the portfolio return for the year?

b$)$ If you wanted to rebalance this portfolio to its original position, what specific actions

should you take?

$4-$ You invested a total of $$10,000$ in two stocks in each$)$ with different betas: stock A

with a beta of $1\mathrm{.}15$ and stock B with a beta of $2\mathrm{.}86.$

a$)$ If the stock market rises $10$ percent over the next year, what will be the value of each

investment?

b$)$ If the stock market declines $10$ percent over the next year, what will be the value of each

investment?