You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is tocreate a portfolio that has an expected return of 12.1 percent. Stock X has an expectedreturn of 10.28 percent and a beta of 1.20, and Stock Y has an expected return of 7.52percent and a beta of .80.a.How much money will you invest in Stock Y? (A negative answer should be indicatedby a minus sign. Do not round intermediate calculations and round your answer to2 decimal places, e.g., 32.16.)b.What is the beta of your portfolio? (Do not round intermediate calculations and roundyour answer to 3 decimal places, e.g., 32.161.)a. Investment in Stock Yb. Portfolio beta Consider the following information about Stocks I and II:Rate of Return If StateOccursProbability of State of-EconomyState of EconomyStock IStock IIRecession.15.05-.21Normal70.18.10Irrational exuberance.15.07.39The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. (Do notround intermediate calculations. Enter your standard deviation answers as a percentrounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimalplaces, e.g., 32.16.)The standard deviation on Stock I's return ispercent, and the Stock I beta isThe standarddeviation on Stock Il's return ispercent, and the Stock II beta isTherefore, based on thestock's systematic risk/beta, Stockis riskier.

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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 12.1 percent. Stock X has an expected return of 10.28 percent and a beta of 1.20, and Stock Y has an expected return of 7.52 percent and a beta of .80. a.How much money will you invest in Stock Y? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g.., 32.161.) a. Investment in Stock Y b. Portfolio beta

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 12.1 percent. Stock X has an expected return of 10.28 percent and a beta of 1.20, and Stock Y has an expected return of 7.52 percent and a beta of .80. a.How much money will you invest in Stock Y? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g.., 32.161.) a. Investment in Stock Y b. Portfolio beta

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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You have $37,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14.7 percent and Stock Y with an expected return of 7.1 percent. Your goal is to create a portfolio with an expected return of 13 percent. All money must be invested. How much will you invest in Stock X? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You have $261,000 to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.1 percent, and Stock L, with an expected return of 11.2 percent. If your goal is to create a portfolio with an expected return of 12.55 percent, how much money will you invest in Stock H and in Stock L? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Investment in Stock H Investment in Stock L
9
You have a 2-stock portfolio with a total value of $100,000. $60,000 is invested in Stock A with a beta of 1.50 and the remainder is invested in Stock B with a beta of 0.75. What is your portfolio's beta? Do not round your intermediate calculations. Round your final answer to two decimal places.
You have $260,000 to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14 percent, and Stock L, with an expected return of 11.1 percent. If your goal is to create a portfolio with an expected return of 12.5 percent, how much money will you invest in Stock H and in Stock L?
Your client has $102,000 invested in stock A. She would like to build a two-stock portfolio by investing another $102,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? Expected Return Standard Deviation Correlation with A A B с 15% 13% 13% 47% 40% 40% Part 1 of 5 The expected return of the portfolio with stock B is 1.00 0.11 0.32 %. (Round to one decimal place.)
You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 13 percent and Stock Y with an expected return of 11 percent. If your goal is to create a portfolio with an expected return of 12.18 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Stock X Stock Y
An investor has $1000 initial wealth for investment and he borrows another $500 at the risk free rate. He then invest the entire total amount of $1500 in the market portfolio. What is his portfolio beta?
Suppose you have $200,000 in cash, and you decide to borrow another $24,000 at a 6% interest rate to invest in the stock market. You invest the entire $224,000 in a portfolio J with a 21% expected return and a 27% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 39% over the year? c. What return do you realize if J falls by 35% over the year? a. What is the expected return and volatility (standard deviation) of your investment? The expected return of your investment is ☐ %. (Round to two decimal places.)
You have been managing a $5 million portfolio that has a beta of 1.35 and a required rate of return of 11.775%. 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 1.05, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places. %
You own a portfolio that has a total value of $250,000 and it is invested in Stock D with a beta of 79 and Stock E with a beta of 1.46. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D? $78,358.21 $58,768.85 O $39,179.50 O $68.563.43 O $171,641.79
An investor wishes to add new stocks to her portfolio. She has information about twoassets, Stock A and Stock B. Stock A has a beta of 1.25 and an expected return of 20%.Stock B has a beta of 0.9 and expected return of 15%. The risk-free rate is 4.5% and themarket risk premium is 15%.Which of these stocks, if any, would you advise the investor to purchase?

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