Problem01: You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 17 percent. If Stock X has an expected return of 14.8 percent and a beta of 1.35, and Stock Y has an expected return of 11.2 percent and a beta of .90, how much money will you invest in Stock Y? How do you interpret your answer? What is the beta of your portfolio?
Problem01: You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 17 percent. If Stock X has an expected return of 14.8 percent and a beta of 1.35, and Stock Y has an expected return of 11.2 percent and a beta of .90, how much money will you invest in Stock Y? How do you interpret your answer? What is the beta of your portfolio?
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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Transcribed Image Text:5:37
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pucsr.school/mod/as
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Homework-Unit 05
Homework
Problem01:
You have $100,000 to invest in a portfolio containing
Stock X and Stock Y. Your goal is to create a portfolio
that has an expected return of 17 percent. If Stock X
has an expected return of 14.8 percent and a beta of
1.35, and Stock Y has an expected return of 11.2
percent and a beta of .90, how much money will you
invest in Stock Y? How do you interpret your answer?
What is the beta of your portfolio?
Problem02:
Consider the following information about Stocks I a
II:
Rate of Return If State Occurs
State of
Probability of
State of Economy
Economy
Stock I
Stock II
Recession
.25
.02
-.25
Normal
.50
.21
.09
Irrational exuberance
.25
.06
.44
The market risk premium is 7 percent, and the risk-free
rate is 4 percent. Which stock has the most systematic
risk? Which one has the most unsystematic risk?
Which stock is “riskier"?
Submission status
Transcribed Image Text:4G
5:36
pucsr.school/mod/as
1
Quiz-Unit05
Consider the following information about three stocks:
a. If your portfolio is invested 40 percent each in A and
B and 20 percent in C, what is the portfolio expected
return? The variance? The standard deviation?
b. If the risk-free rate is 3.80 percent, what is the
expected risk premium on the portfolio?
Submission status
This assignment will accept submissions from
Thursday, 30 December 2021, 6:15 PM
Submission status
No attempt
Grading status
Not graded
Due date
Sunday, 30 January 2022,
7:20 PM
Time ro mainina
21 davo 1 bour
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