Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected

image text in transcribed You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively, $500,$20,$100 and 12%,10%,8%. a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $25, Cisco rises by $5, and Colgate-Palmolive falls by $13. What ar the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Derivatives And Internal Models

Authors: H. Deutsch

4th Edition

1349307661, 9781349307661

More Books

Students also viewed these Finance questions