Question
A portfolio has been constructed from the following securities: You are investing $5,000 in K (15% expected return), $3,000 in L (9% expected rate of
A portfolio has been constructed from the following securities: You are investing $5,000 in K (15% expected return), $3,000 in L (9% expected rate of return), and $2,000 in M (20% expected return) a. What is the expected rate of return from this portfolio? b. If Security L is sold, what will be the expected return of the remaining two-stock portfolio? c. If the investor buys $10,000 of Security N, with an expected return of 12%, and adds it to the portfolio, what will be the expected return of the resulting four-stock portfolio? d. If the investor sells $2,000 of Security K, what will be the expected return of the remaining three-stock portfolio?
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