Question
Consider the three stocks (A, B, C) in the following table. Pt represents price per share at time t, and Qt represents shares outstanding at
Consider the three stocks (A, B, C) in the following table. Pt represents price per share at time t, and Qt represents shares outstanding at time t. There are three different time points 0, 1, and 2, as indicated by the subscripts of the column names. You have $1 million to invest.
P0 | Q0 | P1 | Q1 | P2 | Q2 | |
A | 90 | 100 | 95 | 100 | 95 | 100 |
B | 50 | 200 | 45 | 200 | 45 | 200 |
C | 100 | 200 | 110 | 200 | 105 | 200 |
a. To form an equally weighted portfolio in stocks A, B, and C at time 0, how much money should you invest in stock B? (Round your result to dollars, keep no decimal place.)
b. If you do form an equally weighted portfolio at time 0, what is your portfolio return from time 0 to time 1? (Keep two decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started