You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively, $500, $20, $100 and 12%, 10 %, 8%. a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $25, Cisco rises by $5, and Colgate-Palmolive falls by $13. What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices?

You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively, $500, $20, $100 and 12%, 10 %, 8%. a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $25, Cisco rises by $5, and Colgate-Palmolive falls by $13. What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices?

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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Donald Gilmore has $100,000 invested in a 2-stock portfolio. $80,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.32 b. 1.36 c. 1.38 d. 1.40 e. 1.34
Examples Given You own a portfolio of two stocks, A and B. Stock A is valued at $10,500 and has an expected return of 11 percent. Stock B has an expected return of 9 percent. What is the expected return on the portfolio if the portfolio value is $15,500?
Assume that you have just received information from your investment advisor that your portfolio has reached a value of $1,250,000. Your portfolio consists of three stocks, as follows: Stock Amount Invested % of Total Beta A $250,000 20% 1.12 B $400,000 32% .85 C $600,000 48% .55 Total: $1,250,000 100% Calculate the beta of this investment portfolio. Assume that the expected market return ( r m ) is 9 percent and the expected risk- free rate ( RF ) is 2 percent. What is the expected return ( r j ) for this investment portfolio?
you have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 38.20%, while Circumbendibus Wheels has volatility 35.90%. The correlation between the two shares' returns is 0.44. You have allocated 50.00% of your money to Tinkle.com. What is the volatility of your portfolio?
You own a portfolio that is 21 percent invested in Stock X, 36 percent in Stock Y, and 43 percent in Stock Z. The expected returns on these three stocks are 9 percent, 12 percent, and 14 percent, respectively. What is the expected return on the portfolio?
Suppose Wesley Publishing's stock has a volatility of 70%, while Addison Printing's stock has a volatility of 20%. If the correlation between these stocks is 25%, what is the volatility of the following portfolios of Addison and Wesley: a. 100% Addison b. 75% Addison and 25% Wesley c. 50% Addison and 50% Wesley a. The volatility of a portfolio of 100% Addison stock is %. (Round to two decimal places.) b. The volatility of a portfolio of 75% Addison and 25% Wesley is %. (Round to two decimal places.) c. The volatility of a portfolio of 50% Addison and 50% Wesley is %. (Round to two decimal places.)
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Your portfolio consists of two stocks: 95 shares of Stock A that sell for $47 per share and 120 shares of Stock B that sell for $25 per share. Required: (a) What is the portfolio weight of Stock A? (Click to select) (b) What is the portfolio weight of Stock B? (Click to select) V
Suppose General Motors stock has an expected return of 18% and a volatility of 39%, and Molson-Coors Brewing has an expected return of 14% and a volatility of 30%. If the two stocks are uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 74% General Motors stock and 26% of Molson-Coors Brewing stock? b. Given your answer to (a), is investing all of your money in Molson-Coors stock an efficient portfolio of these two stocks? c. Is investing all of your money in General Motors an efficient portfolio of these two stocks?
Donald Gilmore has $100,000 invested in a 2-stock portfolio. $70,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.31 b. 1.36 c. 1.41 d. 1.46 e. 1.26
Calculate the Holding Period Return (HPR) for the portfolio of the three stocks mentioned in Table 1. Calculate the Holding Period Return (HPR) for each of the stock A, B, and C individually given in Table 1. C. Based upon your calculations, evaluate the Holding Period Return (HPR) to exhibit what change in wealth has taken place?
You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 3216.)

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