Question 14

A portfolio contains 161 shares of Stock A that sell for $42 each, 306 shares of Stock B that sell for $95 each and 55 shares of Stock C that sell for $61 each. What is the portfolio expected return if the expected returns on these stocks is 14.9%, 11.1%, and 7.9% respectively?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

Flag this Question

Question 15

The common stock of Detroit Engines has a beta of 1.54 and expected returns of 14.54 percent. The expected return on the market is 3.31 percent. What is the risk-free rate?

Hint: Use the CAPM equation to get the answer.

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

Flag this Question

Question 16

Suppose your portfolio consists of Stock A and Stock B. Stock A has an expected return of 18.5% and Stock B has an expected return of 4.2%. If your goal is to create a portfolio with an expected return of 12.6%, what is your weight in Stock B?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

Flag this Question

Question 17

You want a portfolio as risky as the market. Given the information below, compute the weight of the risk-free asset.

Enter your answer in percentages, rounded off to two decimal points. Do not enter % in the answer box.

Asset	Investment	Beta
Stock A	40.00%	1.4
Stock B	25.00%	0.9
Stock C	?	2.25
Risk-free asset	?	?