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Wilson Miller has his first full time job and is considering how to invest his savings. His dad suggested he invest no more than 2
Wilson Miller has his first full time job and is considering how to invest his savings. His dad suggested he invest no more than of his savings in the stock of his employer EMR so he is considering investing the remaining in a combination of riskfree investments in the US Treasury Bills, currently paying and Starbucks SBUX common stock. Wilson father has invested in the stock market for many years and suggested that Wilson might expect to earn in the Emerson shares and from the Starbucks shares. Wilson decides to put in the Emerson shares, in the Starbucks shares and the remaining in Treasury Bills. Given Wilson Portfolio Allocation, what rate of return should he expect to receive on his investment?
The expected rate of return for Wilsons portfolio, can be calculated as a weighted average of these expected rates of return, where the weights are the proportions of each investments.
Question a
Calculate the expected rate of return for Wilson Portfolio, in a tabular format display this information and calculate the portfolio return
Question b
Calculate the expected return for Wilsons portfolio, where he places a quarter of his money in Treasury Bills, half in Starbucks and the remainder in EMR
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