portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT and 15% in GOOG. b. How would the portfolio be affected if you distributed your investment in the following way: 30% in ADRE; 25% on MSFT and 45
portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT and 15% in GOOG. b. How would the portfolio be affected if you distributed your investment in the following way: 30% in ADRE; 25% on MSFT and 45
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
a. Using the data provided in problem 3, determine the return and risk for a portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT and 15% in GOOG.
b. How would the portfolio be affected if you distributed your investment in the following way: 30% in ADRE; 25% on MSFT and 45% on GOOG?
c. Which of the two portfolios would a risk seeking investor prefer and why?
Transcribed Image Text:Yields
Year
WMT
ADRE
MSFT
GOOG
BIIB
20x0
12.0%
7.5%
12.3%
13.1%
8.5%
20x1
9.3%
4.3%
12.0%
16.2%
9.1%
20x2
8.2%
8.1%
11.9%
15.7%
9.0%
20x3
10.3%
9.2%
11.8%
18.2%
8.7%
20x4
11.5%
6.1%
12.0%
19.3%
8.8%
Transcribed Image Text:WMT
ADRE
MSFT
GOOG
BIIB
Expected return
Standard deviation (Risk)
10.26%
7.04%
12.00%
16.50%
8.82%
1.56%
1.90%
0.19%
2.40%
0.24%
Coefficient of variation (CV)
15.2028039
26.94374257
1,559023911
14.53914004
2.706878999
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