(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 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 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 a. Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Penny's portfolio is%. (Round to two decimal places.)

(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 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 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 a. Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Penny's portfolio is%. (Round to two decimal places.)

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

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(Related to Checkpoint 8.1) (Computing the portfolio expected rate of returri) 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 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 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
....
a. Based on the current portfolio composition and the given expected rates of return, the expected rate of return
for Penny's portfolio is%. (Round to two decimal places.)

Data table
Expected
Return
3.9%
8.9%
11.2%
$ Value
73,000
53,000
74,000
Treasury bills
Ford (F)
Harley Davidson (HOG)
(Click on the icon in order to copy its contents into a spreadsheet.)
- X

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