An investor wants to earn 18% return by investing in a portfolio that contains Stock 1, Stock 2, and Stock 3. Expected return of Stock 1 is 19% and expected return of Stock 2 is 9%. What are weights of Stock 1 and Stock 2 to meet the required return? a. 10% and 90% respectively b. 90% and 10% respectively c. 0% and 100% respectively d. 95% and 200% respectively

An investor wants to earn 18% return by investing in a portfolio that contains Stock 1, Stock 2, and Stock 3. Expected return of Stock 1 is 19% and expected return of Stock 2 is 9%. What are weights of Stock 1 and Stock 2 to meet the required return? a. 10% and 90% respectively b. 90% and 10% respectively c. 0% and 100% respectively d. 95% and 200% respectively

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that you have just received information from your investment advisor that your portfolio has reached a value of $1,250,000. Your portfolio consists of three stocks, as follows: Stock Amount Invested % of Total Beta A $250,000 20% 1.12 B $400,000 32% .85 C $600,000 48% .55 Total: $1,250,000 100% Calculate the beta of this investment portfolio. Assume that the expected market return ( r m ) is 9 percent and the expected risk- free rate ( RF ) is 2 percent. What is the expected return ( r j ) for this investment portfolio?
Assume a fully invested two - asset portfolio without lending or borrowing and consisting of the two stocks Risky and Safer that have the following expected returns and standard deviations of returns. \table[[, Stock R, Stock S], [\table[[ Expected], [return]], 14%,8% Assume a fully invested two-asset portfolio without lending or borrowing and consisting of the two stocks Risky and Safer that have the following expected returns and standard deviations of returns. Stock R Stock S Expected return 14% 8% St. Dev. 6% 3% If the two stocks have a correlation coefficient of 0.25, what is the weight invested in Stock R that minimizes the variance of the portfolio? (1 of 2) (Enter your answer as a percentage, i.e., "10.25" for 10.25 percent.)
You have a portfolio that is 33 percent invested in Stock R, 17 percent invested in Stock S, with the remainder in Stock T. The expected return on these stocks is 9.4 percent, 10.8 percent, and 13.1 percent, respectively. What is the expected return on the portfolio? Multiple Choice 11.10% 11.29% 11.49% 12.05% 10.18%
Calculate the weighted average expected return of the portfolio. Stock Investment Expected ReturnA $20,000 15%B $4,000 10%C $26,000 12%
An investor has a 2-stock portfolio with $25,000 invested in Stock X and $50,000 invested in Stock Y. X's beta is 1.50 and Y s beta is 0.60. What is the beta of the investor's portfolio?
Sally has investments with the following characteristics in her portfolio: Investment in Beta Amount invested Stock Q 1.5 $80,000 Stock R 2.0 $50,000 Stock S 0.85 $70,000 Given the risk free rate of 2% and the market return of 7%, what is the expected rate of return of Sally’s investment portfolio?
Suppose the return of asset A to D, is given as follows: Asset 2018 2019 2020 2021 A 9% 10% -2 % 15% B 7% 10% 5 % 9% C -11% 20% 12% 8% D 10% 16% -5 % -8% Calculate the expected return of: a. One stock at a time b. Portfolio of A, B & D, and, B, D, & A c. Portfolio of A & B, and, D & B d. Portfolio of all the four stocks
Assume a two-stock portfolio with $50,000 invested in Stock A and $30,000 invested in Stock B. The expected return of Stock A is 12% and the expected return of Stock B is -2%. What's the expected portfolio return? Group of answer choices 7.50% 6.75% 10.0% 6.0%
Use Excel
Donald Gilmore has $100,000 invested in a 2-stock portfolio. $70,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.31 b. 1.36 c. 1.41 d. 1.46 e. 1.26
Refer to the table below. Assume En. Nazril held the portfolio consisting of 50% of Stock B and 50% of Stock V. Year Stock B's Return, rB | Stock V's Return, rV 2015 -18% -14.5% 2016 33% 21.8% 2017 15% 30.5% 2018 -0.50% -7.6% 2019 27% 26.3% i. What would be the average return on the portfolio for the period of 2015-2019. ii. Calculate the standard deviation for the portfolio.
A portfolio is invested 45 percent in Stock G, 40 percent in Stock J, and 15 percent in Stock K. The expected returns on these stocks are 11 percent, 9 percent, and 15 percent, respectively. What is the portfolio's expected return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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