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Please show work and formula used. Thank you!!! Suppose you have an investment portfolio of $4,500,000. Seven-sixteenths of our portfolio consists of investment in the

Please show work and formula used. Thank you!!!
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Suppose you have an investment portfolio of $4,500,000. Seven-sixteenths of our portfolio consists of investment in the stock of Coca Cola (KO). The dollar amount vested in risk-free US Treasury securities yielding a certain return of 2.25%i $900,000. The remaining amount is allocated between General Electric (GE) and Microsoft MSFT) in such a way that the amount invested in Microsoft is seven times the in General Electric. The probability distribution of the returns on the securities in the portfolio is as follows: EVENT PROBABILITY KO .9% 22.5% 21 .6% MSFT 18.9% 16.2% 0% 0.30 0.45 13.5% 25.2% 15.3% As mentioned in the notes, lower case x's are used to denote portfolio defined to be the fraction of your wealth invested in a given security. Thus, if Coca Cola weights, which are esignated as Security?, the fact that seven sixteenth of your portfolio is invested in is d Coca Cola is stated algebraically as x7/16 0.4375. Calculate the portfolio weights on the other three securities in your portfolio. Also compute the return on the each of the three events. Next, calculate the expected return on Coca Cola Electric, on Microsoft, and finally on the entire portfolio. Make sure that your calculations are in agreement with the fact that the expected return on the portfolio is a weighted sum of the expected return on the securities in the portfolio where expected return on each security is weighted with the fraction invested in that security. Or, in portfolio in , on General mathematical terms, confirm that: E(Rp)=x,E(K) +x,E(K) + 2)+x,E(R)

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