$20,500 is invested in this portfolio which consists of stocks Netflix (NFLX) and Amazon (AMZN). $8,200 is invested in NFLX.Probability of State ofNFLXAMZNEconomy15%65%20%RecessionNormalBoom5%8%13%What is the portfolio expected return and standard deviation?-17%12%29% NFLX has a beta of 1.05 and is currently selling for $79.50. If the T-bill is currently yielding 5.2% and the expected market return is11%, does the NFLX required return based on CAPM and the expected return based on the possible states of the economy (from#1a) yield the same results?

To Find: Portfolio Expected return Portfolio Standard Deviation

$20,500 is invested in this portfolio which consists of stocks Netflix (NFLX) and Amazon (AMZN). $8,200 is invested in NFLX. Probability of State of NFLX AMZN Economy 15% 65% 20% Recession Normal Boom 5% 8% 13% What is the portfolio expected return and standard deviation? -17% 12% 29%

$20,500 is invested in this portfolio which consists of stocks Netflix (NFLX) and Amazon (AMZN). $8,200 is invested in NFLX. Probability of State of NFLX AMZN Economy 15% 65% 20% Recession Normal Boom 5% 8% 13% What is the portfolio expected return and standard deviation? -17% 12% 29%

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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Question

$20,500 is invested in this portfolio which consists of stocks Netflix (NFLX) and Amazon (AMZN). $8,200 is invested in NFLX.
Probability of State of
NFLX
AMZN
Economy
15%
65%
20%
Recession
Normal
Boom
5%
8%
13%
What is the portfolio expected return and standard deviation?
-17%
12%
29%

NFLX has a beta of 1.05 and is currently selling for $79.50. If the T-bill is currently yielding 5.2% and the expected market return is
11%, does the NFLX required return based on CAPM and the expected return based on the possible states of the economy (from
#1a) yield the same results?

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