FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have invested in a portfolio that contains several shares. After a while, you want to sell off your entire holding in one of the

You have invested in a portfolio that contains several shares. After a while, you want to sell off your entire holding in one of the shares in the portfolio. Your portfolio has an expected return of 13.13% and the stock you sell has an expected return of 14.29%. 



What is the expected return of your new portfolio if the stock you are selling had a weight of 0.20 in the original portfolio?

Step by Step Solution

★★★★★

3.39 Rating (174 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the expected return of the new portfolio first we need to determine the weight of the s... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Corporate Finance

Fundamentals Of Corporate Finance

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

3rd Edition

013350767X, 978-0133507676

More Books

Students also viewed these Finance questions

Question

★★★★★
1. Security A has expected return of 17.6% and beta of 1.4. If the risk-free rate is 6%, what is the reward-to-risk rate for Security A? Question 2 The common stock of Detroit Engines has a beta of...

Answered: 1 week ago

Question

★★★★★
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

Answered: 1 week ago

Question

★★★★★
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Answered: 1 week ago

Question

★★★★★
Our first set of questions is related to some basic exercises from the required prerequisite background in mathematics (Calculus I and Discrete Math). You should feel very comfortable doing these....

Answered: 1 week ago

Question

★★★★★
Access the February 26, 2010, filing of the 2009 calendar-year 10-K report of McDonalds, (ticker MCD) from www.sec.gov. Required 1. Review McDonalds balance sheet and identify how many classes of...

Answered: 1 week ago

Question

★★★★★
For the following exercises, use the spinner shown in Figure 3 to find the probabilities indicated. Landing on green or blue 0 F E Figure 3 A D I

Answered: 1 week ago

Question

★★★★★
For the random variable X, it is known that E(X4) = 50, E(2X2 + 7) = 17. Then the variance of the variable Y = X2 equals (a) 25 (b) 50 (c) 75 (d) 94 (e) 100

Answered: 1 week ago

Question

★★★★★
Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs: Quantity of houses painted per month: 1 2 3 4 5 6 7 8 Variable costs: $10, $20, $40,...

Answered: 1 week ago

Question

★★★★★
Cost of Common Equity The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $20.00 per...

Answered: 1 week ago

Question

★★★★★
Raugust-Mathwig, Inc., a corporation, was the sole general partner of a limited partnership. Calvin Raugust was the major shareholder of this corporation. The three limited partners were Cal-Lee...

Answered: 1 week ago

Question

★★★★★
A ould be done within 15-20 min. after submitting the test. estion 1 1) A private company in New York bought office furniture and equipment at a cost of $255,000. The total salvage value of this...

Answered: 1 week ago

Question

★★★★★
Hardyke Group operates a local after-school recreation and activities program. The Education Department is a state governmental agency. Hardyke has an agreement with the Department to provide...

Answered: 1 week ago

Question

★★★★★
C TBM aw 2 Exercise 16-38 (Static) Flexible Budget (LO 16-2) 52 nts Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company...

Answered: 1 week ago

Question

★★★★★
Abercrombie & Fitch Co.-Transactions and Financial Statements Abercrombie & Fitch Co., a Delaware corporation, is principally engaged in the purchase, distribution and sale of men's, women's and...

Answered: 1 week ago

Question

★★★★★
Splish Brothers Inc.'s comparative balance sheets are presented below. Splish Brothers Inc. Comparative Balance Sheets December 31 Cash Accounts receivable Land Buildings 2022 2021 $ 14,700 $11,000...

Answered: 1 week ago

Question

★★★★★
Consider the following classic portfolio choice problem. Two assets are available to an investor at time t. One is riskless, with simple return Rf from time t to t+1 , and the other is risky. The...

Answered: 1 week ago

Question

★★★★★
Part 2 : Create 2 Arrays, Array 1 and Array 2 - Initialize Array 1 as: 1 , 2 , 3 , 4 , and Array _ 2 to 0 , 0 , 0 , 0 ( must use the DUP instruction ) Requirement: Copy content of Array 1 to array 2...

Answered: 1 week ago

Question

★★★★★
Nike manufactures shoes and sportswear. How has the Internet changed the way this company communicates with its suppliers and retail customers?

Answered: 1 week ago

Question

★★★★★
Find the annual 10-K report for Green Mountain Coffee Roasters (GMCR) online for 2012 (filed in September 2012). Answer the following questions from its balance sheet: a. How much cash did Green...

Answered: 1 week ago

Question

★★★★★
Your firm is planning to invest in an automated packaging plant. Harburtin Industries is an all-equity firm that specializes in this business. Suppose Harburtin's equity beta is 0.85, the risk-free...

Answered: 1 week ago

Question

★★★★★
How do changes in inflation expectations impact interest rates?

Answered: 1 week ago

Question

★★★★★
=+ Burning coal inside houses can lead to increased levels of indoor air toxins that may have negative effects on lung function. Among the children in the study, 514 came from households that use...

Answered: 1 week ago

Question

★★★★★
=+7.2 Large-Sample Confidence Intervals for a Population Mean

Answered: 1 week ago

Question

★★★★★
=+5. Random samples of size n are selected from a normal population whose standard deviation is known to be 2.

Answered: 1 week ago

Previous Question Next Question