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Please show all the calculations Stock Stock Number of shares Price Beta 750 220 51 0.8 460 19 Return ofReturn of Return of Economic conditiorn
Please show all the calculations
Stock Stock Number of shares Price Beta 750 220 51 0.8 460 19 Return ofReturn of Return of Economic conditiorn Probability Boom 20% 20% 22% 23 % Normal 50% 15% 10% 12% Recession 30% 2% 5% 7% Required a) What is the expected return and standard deviation on this portfolio? b) What is the expected return on the market using portfolio beta ifBf .5%? c) You are not satisfied with the return of this portfolio and are offered an opportunity to invest in a stock that has a beta of 2.1 and an expected return of 23% (stock D). You decide to add this stock to your portfolio to enhance its return and sell the stock that has the lowest expected return. What are the new weights for each stock in the new portfolio so that your portfolio's return and beta increase to 18% and 1.7, respectivelyStep by Step Solution
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