Question
A. You own a portfolio that has $2,666 invested in Stock A and $3,772 invested in Stock B. If the expected returns on these stocks
A. You own a portfolio that has $2,666 invested in Stock A and $3,772 invested in Stock B. If the expected returns on these stocks are 8 percent and 17 percent, respectively, what is the expected return (in percent) on the portfolio?Answer to two decimals.
B. You have $11,616 to invest in a stock portfolio. Your choices are Stock X with an expected return of 13.69 percent and Stock Y with an expected return of 10.17 percent. If your goal is to create portfolio with an expected return of 11.94 percent, how much money (in $) will you invest in Stock X?Answer to two decimals, carry intermediate calcs. to four decimals.
C. An analyst estimates there is a probability of 18 percent that there will be a recession next year. He thinks the probability of things being normal is three times the probability of a recession, with the remaining probability assigned to a boom taking place. A stock is expected to return -19 percent in a recession, 13 percent under normal conditions and 28 percent if there is a boom. What is the expected return (in percent) on this stock?Answer to two decimals, carry intermediate calcs. to four decimals.
D. A portfolio is invested 27 percent in Stock G, 31 percent in Stock J, with remainder in Stock K. The expected returns on these stocks are 8.19 percent, 14.1 percent, and 17.39 percent, respectively. What is the portfolio's expected return?Answer to two decimals.
F. You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.8 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?Answer to two decimals.
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