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8. (Rate of return on a portfolio) A portfolio has been constructed from the following securities: Security Expected return Amount invested 5% $40,000 Q 18
8. (Rate of return on a portfolio) A portfolio has been constructed from the following securities: Security Expected return Amount invested 5% $40,000 Q 18 25,000 R 15 35,000 a. What is the expected rate of return from this port- folio? b. If Security Q is sold, what will be the expected re- turn of the remaining two-stock portfolio? c. If the investor buys $50,000 of Security S, with ex- pected return of 10%, and adds it to the portfolio, what will be the expected return of the resulting four-stock portfolio? d. If the investor sells $20,000 of Security R, what will be the expected return of the remaining three-stock portfolio
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