b) i think its 10.15% Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turned 21 years ofage. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG):a. Based on the current portfolio composition and the expected rates of return, what is the expected rate of return for Penny's portfolio?b. If Penny wants to increase her expected portfolio rate of return, she can increase the allocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease herholdings of Treasury bills. If Penny moves all her money out of Treasury bills and splits it evenly between the two stocks, what will be her expected rate of return?c. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio?a. Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Penny's portfolio is 7.83 %2% (Round to two decimal places)b. If Penny moves all her money out of Treasury bills and splits it evenly between the two stocks, her expected rate of retum for her portfolio isc. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio? (Selectthe best choice below.)OA. Although the Treasury bills in this problem have a lower expected rate of return than Ford and Harley Davidson stock, this is not always true. Often times Treasury bills have returns muchhigher than stock and then they should be included in a portfolio.OB. There is no reason for anyone to ever hold Treasury bills in their portfolios.C. Although Treasury bills have a lower expected rate of return then stocks, they are risk-free compared to other securities. Therefore, many people include Treasury bills in their portfolios tolower the risk of their portfolios.WSOD. Although Treasury bills have a lower expected rate of return than stocks, they are risk-free compared to other securities. Therefore, many people include Treasury bills in their portfolios toincrease the risk of their portfolios.3Xmand80F3ED$4CDogF4RF%5VFSTG6MacBook AirBF6Y&0877H8F7UN*8JDII1- 0M9KMOSISO19O1(Round to two decimal places.)V.0<LFIG38PVcommandFI{91;111?option.1Adele (Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turned 21 years ofage. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG):a. Based on the current portfolio composition and the expected rates of return, what is the expected rate of return for Penny's portfolio?b. If Penny wants to increase her expected portfolio rate of return, she can increase the allocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease herholdings of Treasury bills. If Penny moves all her money out of Treasury bills and splits it evenly between the two stocks, what will be her expected rate of return?c. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio?2**WSXgeData tablemand#3Treasury billsFord (F)Harley Davidson (HOG)(Click on the icon in order to copy its contents into a spreadsheet.)80F3ED$4CPrint898F4RF%5ExpectedReturnV3.4%6.6%13.7%FSTDoneG6$ Value80,00055,00065,000MacBook AirBF6Y&7HF7UNof return for Penny's portfolio is 7.63 %. (Round to two decimal places.)pected rate of retum for her portfolio is %. (Round to two decimal places.)cted portfolio return, so why would anyone want to hold Treasury bills in their portfolio? (Selectpared to other securities. Therefore, many people include Treasury bills in their portfolios to*arley Davidson stock, this is not always true. Often times Treasury bills have returns muchpared to other securities. Therefore, many people include Treasury bills in their portfolios toaJ8DII1Ml9KMOSISODDOV.1OHLAF16P->command:.;m+1[I?optionI1Next112}Adelete1

Note : Answer requirement is for part b only hence the solution and calculation for part b is…

(Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turned 21 years of age. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG): a. Based on the current portfolio composition and the expected rates of retum, what is the expected rate of return for Penny's portfolio? b. If Penny wants to increase her expected portfolio rate of return, she can increase the allocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease her holdings of Treasury bills. If Penny moves all her money out of Treasury bills and splits it evenly between the two stocks, what will be her expected rate of return? c. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio? Data table Expected Return $ Value -X of retum for Penny's portfolio is 7.83 % (Round to two decimal places) pected rate of retum for her portfolio is%. (Round to two decimal places) sted portfolio return, so why would anyone want to hold Treasury bills in their portfolio? (Select

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