You have $19,878 to invest in a stock portfolio. Your choices are Stock "X" with an expected return of 12.5% and Stock Y with an expected return of 8.24%. If your goal is to create a portfolio with an expected return of 11.92%, how much money will you invest in Stock X?
You have $19,878 to invest in a stock portfolio. Your choices are Stock "X" with an expected return of 12.5% and Stock Y with an expected return of 8.24%. If your goal is to create a portfolio with an expected return of 11.92%, how much money will you invest in Stock X?
|
State of Economy |
Probability of State of Economy |
Return Stock A |
Return Stock B |
Return Stock C |
| Boom | 0.20 | 19.41% | 20.65% | 29.51% |
|
Good |
0.35 | 8.08% | 10.59% | 13.88% |
| Poor | 0.40 | 5.53% | 3.23% | 5.04% |
| Bust | 0.05 | 1.77% | 1.47% | 1.16% |
Your portfolio is invested 23% each in stock A and C and the remaining in stock B. What is the expected return of the portfolio?
NOTE: Enter the PERCENTAGE number rounding to two decimals. If your decimal answer is 0.034576, your answer must be 3.46. DO NOT USE the % sign
A Stock has a beta of 1, the expected return on the market is 17.72%, and the risk-free rate is 4.85%. What must the expected return on this stock be?
NOTE: Enter the PERCENTAGE number rounding to two decimals. If your decimal answer is 0.034576, your answer must be 3.46. DO NOT USE the % sign
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The combination of investments undertaken to minimize the risk and maximize the return is called Portfolio. Portfolio management is all about diversifying the investments in different types of stocks, in order to enhance the return and minimize the risk.
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