QUESTION 5You have invested 20% of your money in Microsoft, 45% in GM, and the rest in Walmart. Walmart has expected return of 14%, andthe expected returns of Microsoft and GM are 12.65% and 3.12%, respectively. What is the expected return of your portfolio?7.58%8.83%9.56%10.00%12.34%Click Save and Submit to save and submit. Click Save All Answers to save all answers.#34%5MacBook ProA6&7*89Save All0

Expected return The return an investor expects to receive from an investment is called the expected…

Answered: QUESTION 5 You have invested 20% of…

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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The investment funds for your company includes the following: Stock $ Amount Invested Beta for Each Stock A $ 600,000 .8 B $ 1,800,000 1.4 C $ 2,400,000 1.7 D $ 700,000 -.6 E $ 3,000,000 1.1 You need to calculate the required rate of return for the investment. The market’s required return for Year 2020 is 12% and the risk free rate is 3% Show your work on the following: Calculate the average beta for the portfolio. Calculate the required rate of return for the entire portfolio. The CFO of your company is anticipating that the stock market will be decreasing in the near future. Please give a recommendation on which stock the company should sell and which stock the company should buy. The CFO also wants you to explain your answer.
Suppose you have the following investments: Security Amount Invested Expected Return Beta A $2,000 5% .80 B $4,000 10% .95 C $6,000 15% 1.10 D $8,000 18% 1.40 What is the expected return on this portfolio?
Question 9 Aluminum maker Alcoa has a beta of about 1.73, whereas Hormel Foods has a beta of 1.68. If the expected excess return of the marker portfolio is 3%, which of these firms has a higher equity cost of capital, and how much higher is it? Show your workings and round your final answers to two decimal places.
Nikul
8. Problem 8.16 (CAPM and Portfolio Return) eBook Problem Walk-Through You have been managing a $5 million portfolio that has beta of 1.15 and a required rate of return of 8.175%. The current risk-free rate is 3%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.85, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places. %
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23. What return should be expected from investing in the market portfolio that is expected to yield 18% if the investment includes all of the investor's funds plus 30% additional funds borrowed at the risk-free rate of 6%? A. 18.6% B. 19.6% C. 21.6% D. 24.0%
INV2 P1 3 You are considering an investment in a portfolio P with the following expected returns in three different states of nature: Recession Steady Expansion Probability 0.10 0.55 0.35 Return on P -15% 20% 40% The risk-free rate is currently 4%, and the market portfolio M has an expected return of 16% and standard deviation of 20%, and its correlation with P is .7. Does portfolio P have a positive or negative alpha relative to its required return given its level of risk?
Question 4?
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QUESTION 5 You have invested 20% of your money in Microsoft, 45% in GM, and the rest in Walmart. Walmart has expected return of 14%, and the expected returns of Microsoft and GM are 12.65% and 3.12%, respectively. What is the expected return of your portfolio? 7.58% 8.83% 9.56% 10.00% 12.34%