Suppose you invest in 230 shares of Johnson and Johnson at $70 per share and 240 shares of Yahoo at $20 per share. If the price of Johnson and Johnson increases to $80 and the price of Yahoo decreases to $18 per share, what is the return on your portfolio? ..... O A. 13.06% O B. 9.58% O C. 10.45% O D. 8.71%

Q: 3. An individual has $20,000 invested in a stock with a beta of 0.9 and another $30,000 in a stock…

A: In this question we are required to calculate the Beta of the portfolio from the following given…

Q: Consider $10m invested in a stock. The annual volatility of the rate of return is 25%. Assuming that…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: You have assigned the following values to these three firms: Upcoming Dividend $0.60 1.54 0.50 Estee…

A: The rate of return that will be required by an investor who has invested in a stock portfolio will…

Q: Assuming you are investing 50% in A and 50% in B,  The possible returns and associated…

A: Expected Return of Each Stock(Mean) = Summation of P*X P= Probability X= Return Standard…

Q: You have $69,000. You put 20% of your money in a stock with an expected return of 13%, $40,000 in a…

A: The objective of the question is to calculate the expected return of the portfolio. The expected…

Q: . Among the financial ratios learned, what is the best ratio in understanding and monitoring the…

A: A financial ratio is used to compare a company's financial situation or output to that of other…

Q: You own a portfolio that has $2,000 invested in Stock A and $8,000 invested in Stock B. If the…

A: Given: Portfolio consists of Stock A = $2000 Stock B = $8000 The expected return on the stock is 20%…

Q: F 6.70% 8.53% 8.38% 9.25% Stock Investment Expected Return A $100,000 B $200,000 с $100,000 D…

A: A collection of investments in various assets is known as a portfolio. When a portfolio comprises…

Q: You are the Chief Executive Officer for NeverEnding Tyres Inc. You have the responsibility to secure…

A: A conflict of interest arises if, due to an issue between private (or autonomous) interests and…

Q: Assume that the CAPM is true, ?F = 5%, ?M = 15% ??? ?M = 0.1. An investor with $10,000 to invest…

A:

Q: You invest 50% of your money in IBM stock and 50% of your money in Microsoft stock. The volatilities…

A: Solution:- Volatility means the standard deviation of return of portfolio. We know, standard…

Q: You short sell $5,000 worth of Dollar General (DG) stock and use the proceeds to purchase $10,000…

A: Dollar General (DG ) Investment = -5000Target (TGT) stock Investment = 10000

Q: You have $60,000. You put 17% of your money in a stock with an expected return of 11%, $38,000 in a…

A: As per the given information:to determine:the expected return of the portfolio.

Q: A portfolio consists of 4 stocks with the following characteristics: Stock 1 234 $ Invested $30,000…

A: We need to use CAPM model to calculate expected rate of return.. Expected rate of return =Risk free…

Q: Suppose you valued a firm and came up with the value of equity of 9.50. The probability of financial…

A: The value of a share is the current market price of a stock of a company. It is calculated as the…

Q: You have the following share price of XYZ.   DATE Price 2-Mar-2021 $100 3-Mar-2021 $60…

A: Geometric average rate of return will be calculated considering return in each period. Following is…

Q: 4. Use the information given below to determine if the following securities are correctly priced,…

A: Here,

Q: what will be the risk portfolio and return?

A: The portfolio return is the return expected from the invested securities. These are expressed as…

Q: Your portfolio consists of115 shares of CSH and 75 shares of​ EJH, which you just bought at $22and…

A: A portfolio is made of different stocks. The portfolio return depends upon the individual returns…

Q: What do you notice about the change in the cost of equity as beta increases? (Select the best…

A: Because you have posted multiple questions , we will answer the first question only. if you want…

Q: Problem 3. Consider the following information about Stocks A, B and C: Amount Invested Beta A…

A: Systematic risk refers to the risk that the economy faces as a whole and it cannot be mitigated by…

Q: You are going to make a portfolio consisting of 50 % of Bank of America Stock and 50 % of…

A: StateProbability of StateBOA returnsCaterpillars returnsBoom80%34%39%Bust20%-3%-2%Weight of…

Q: lory Tech Corporation's stock has a required return of 13.00 %, the risk- free rate is 5.00%, and…

A: CAPME(ri) = Rf  + Bi * (E(Rm) - Rf)E(ri) = Expected returnRf = Risk free rateBi = BetaE(Rm) =…

Q: Finance   You have ​$66,000. You put 24​% of your money in a stock with an expected return of…

A: As per the given information: Total amount = $66,00024% of money invested in a stock with an…

Q: Suppose you invest in 150 shares of Harley-Davidson (HOG) at $40 per share and 250 shares of Yahoo…

A: The return of a portfolio refers to its profitability which is calculated as a percentage increase…

Q: you again receive $1 dividend per share and then you sell all your shares at $14 per share. The…

A: Information Provided: Shares purchased at $11 = 2 Dividends = $1 per share Shares purchased at the…

Q: Suppose you hold a diversified portfolio consisting of a $4,000 investment in each of 14 different…

A: Given: Amount invested one stock = $4,000 Total amount = 14 * $4,000 = $56,000 Portfolio beta = 1.30…

Q: You hold a diversified portfolio consisting of a $15,082 invested in each of 5 different common…

A: Portfolio Beta = 1.13 Total Investment = $15,082 Number of stocks = 5 Removing stock beta = 0.8…

Q: You have a portfolio consisting of 100 shares of GOOG at $130 per share, 50 shares of WMT at $165…

A: Portfolio return= (New Value - Initial Investment) /Initial Investment

Q: You hold a diversified portfolio consisting of a $5,542 invested in each of 5 different common…

A: Beta of the new portfolio is calculated using following equationWeight of each stock is calculated…

Q: Cost of equity: SML. Stan is expanding his business and will sell common stock for the needed funds.…

A: Risk free rate = 3.4% Market return = 9.9%

Q: You have a portfolio worth $75,000 consisting of 15 stocks with $5,000 invested in each. The…

A: Beta is measurement of risk. It shows the systematic risk which is involved in earning a return from…

Q: Expected Return of Portfolio (AB) = STDEV of Portfolio (AB)=7S

A: The expected portfolio return is the important measure that evaluates the projected gain or loss…

Q: You invested 10 000 USD and your dividends are 2.1 % and capital appreciation is 7.4%. Calculate…

A: A part of profit paid to the investors in a company is called dividend. Dividends are paid to equity…

Q: You own a portfolio that has $1,500 invested in Stock A and $3,900 invested in Stock B. If the…

A: The weight of each stock is calculated below Weight of stock A = Investment in stock AInvestment in…

Q: Your purchase $8,000 of Viking stock and $7,000 of Saint stock. Viking's beta is 0.63 and Saint's…

A: The beta of the portfolio is calculated below Portfolio Beta = Beta of Vikings×Investment in…

Q: You have assigned the following values to these three firms: 1 2 AENT 3 4 Ester Lauder Kimbo Realty…

A: Using CGM, the stock valuation or required return can be determined by using following formula:Using…

Q: Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio beta can be calculated by using this equation. Portfolio beta =weight of stock 1*portfolio…

Q: You invest PHP 100,000.00 in Stock A, PHP 300,000.00 in Stock B. You expect a return of 10% for…

A: Amount invested in A (A) = Php 100000 Amount invested in B (B) = Php 300000 A's return (Ra) = 10%…

Q: Suppose that every time a fund manager trades stock, transaction costs such as commissions and…

A: Rate of return is the amount expressed in terms of percentage which an investor expects from the…

Q: You have $150,000 invested in three stocks as follows: Stock Investment Stock's Beta SYK $50,000 1.9…

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Bc*Wc)whereBp =Beta of portfolioBa =…

Q: Your portfolio consists of 95 shares of CSH and 55 shares of EJH, which you just bought at $21.68…

A: Shares of CSH = 95Shares of EJH = 55Original price of CSH = $21.68Original price of EJH = $31.95To…

Q: You decide to form a portfolio of the following amounts invested in the following stocks. What is…

A: Calculating Total Investment and Weights of Each Stock:The first step in determining the expected…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.