LO1 5. Calculating Expected Return Based on the following information, calculate the expected return. State of Probability of State of Rate of Return if State Economy Economy Occurs Recession .20 . 13- Boom 80 19LO1 3. Portfolio Expected Return You own a portfolio that is 15 percent invested in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio? LO1 4. Portfolio Expected Return You have $ 10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 12.4 percent and Stock Y with an expected return of 10.1 percent. If your goal is to create a portfolio with an expected return of 10.85 percent, how much money will you invest in Stock X? In Stock Y? LO1 5. Calculating Expected Return Based on the following information, calculate the expected return.LO3 11. Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q. 20 percent in Stock R, 30 percent in Stock S, and 35 percent in Stock T. The betas for these four stocks are . 79. 1.23, 1.13, and 1.36, respectively. What is the portfolio beta? LO3 12. Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.34 and the total portfolio is equally as risky as the market. what must the beta be for the other stock in your portfolio? LO4 13. Using CAPM A stock has a beta of 1.15. the expected return on the market is 11.3 percent, and the risk-free rate is 3.6LO4 13. Using CAPM A stock has a beta of 1.15, the expected return on the market is 11.3 percent, and the risk-free rate is 3.6 percent. What must the expected return on this stock be? Page 389 LO4 14. Using CAPM A stock has an expected return of 11.4 percent. the risk-free rate is 3.9 percent, and the market risk premium X is 6.8 percent. What must the beta of this stock be? LO4 15. Using CAPM A stock has an expected return of 11.85 percent, its beta is 1.08, and the risk-free rate is 3.9 percent. What must the expected return on the market be? 1 04 16 Using CAPM stock has an expected return of 10.45 percent and a beta of . 85, and the expected return on the market is