Your portfolio consists of $75,536 invested in a stock that has a beta-1.2, $85,280 invested in a stock that has a beta-1.8, and $22,313 invested in a stock that has a beta- 1.7. The risk-free rate is 2.6%. Last year this portfolio had a required return of 10.3%. This year nothing has changed except that the market risk premium has increased by 4.1%. What is the portfolio's current required rate of return? O 16.62% O 17.62% 18.12 % 17.12% O 16.12 %

Q: What is the expected return of a portfolio with two stocks that has 450 shares of stock A, which has…

A: Step 1: Calculate the Total Value of Each StockFor Stock A:• Number of shares = 450• Price per share…

Q: You own a portfolio that has $42,000 invested in Stock A and $11,500 invested in Stock B. If the…

A: To Find: Expected return on portfolio

Q: What is the portfolio expected return

A: Anticipated return from an investment expected by the investor is known as expected return. The…

Q: Tyler Trucks stock has an annual return mean and standard deviation of 14 percent and 43 percent,…

A: To address this question, the initial step involves calculating the portfolio's expected return and…

Q: After all of these changes, what will be the difference in the required returns for HRI and LRI? Do…

A: CAPM also is known as capital asset pricing model which displays the systematic relationship between…

Q: Congratulations! Your portfolio returned 12.9% last year, 2.4% better than the market return of…

A: The sharpe's ,measure of your portfolio is 0.529

Q: his problem.  Can you please provide me with some help?  Thank you.  I appreciate it. You expect to…

A: Portfolio expected return is weighted return of each stock in the portfolio.

Q: The current spot price of a stock is $50, the expected return of the stock is 7%, and the volatility…

A: The Black-Scholes-Merton Model, often referred to as the Black-Scholes Model, is a groundbreaking…

Q: A portfolio earned 16% in the past year. The target beta is 1.0 and the actual beta was 1.20. The S.…

A: Expected portfolio return = 16%Risk-free rate= 2%Actual beta= 1.2Target beta=Market return=…

Q: nsider historical data showing that the average annual rate of return on the S&P 500 portfolio over…

A: T-bill rate (Rf)2%Average return more than T-bills (Rf)8%Standard deviation of S&P 50028%Weight…

Q: ver the past 3 years, your stock fund earned returns of 10%, -8%, and 12

A: Solution:- Average annual compound rate means the average of the returns earned in the various…

Q: 8.Suppose you invest $1,000 in Ford stock, and $3,000 in Tyco International stock. You expect a…

A: Given information :  Amount invested in Ford stock = $1,000 Amount invested in Tyco International…

Q: The risk-free rate is 5% and the expected return on the market is 14%. P&G Stock has a beta of 1.2.…

A: Here,Expected Return of the Market (ERM) is 14%Current Return of Market (RM) is 15%Actual Return on…

Q: Your portfolio consists of $62,276 invested in a stock that has a beta = 1.2, $23,528 invested in a…

A: Step 1: Calculate the new market risk premium.Last year's market risk premium + Increase in market…

Q: You want to invest in Costco Stock and would like to know the potential returns of the stock. You…

A: The estimated rate of return is the return that an investor is expecting on its investments. It is…

Q: Portfolio XYZ had a return last year of 14%. The risk-free rate of return was 3%. The market return…

A: Portfolio Alpha is that amount which is the difference between the actual return and CAPM return…

Q: You estimate that the expected return of NFLX stock is 8%, and standard deviation of the stock is…

A: Investors use these estimates of expected return and standard deviation of a portfolio to determine…

Q: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio…

A: Treasury bill return=3%S&P 500 portfolio return = 3%+8% = 11%Standard deviation = 35%

Q: The return on the market portfolio is currently 13%. Bato Gan Corp.Stockholders requires a rate of…

A: The rate of return (r) is 21%. The market rate of return (rm) is 13%. The beta (β) is 3.5.

Q: Consider an investor had a portfolio of $10 million bonds in a long position suppose the confidence…

A: Value at Risk (VAR) is used to quantify the risk which emerges due to movement in prices or returns…

Q: Consider a portfolio with $5 million invested in Stock A and $7.5 million invested in Stock B. Stock…

A: Expected Return of Stock A is 13.5% Expected Return of Stock B is 8% Standard Deviation of Stock A…

Q: Your portfolio consists of Php100,000 invested in a stock that has a beta = 0.8, Php150,000 invested…

A: Market risk premium is required to find the required rate of return. Hence, the market risk premium…

Q: A firm has a portfolio composed of stock A and B with normally distributed returns. Stock A has an…

A: Value at Risk: Value-at-risk is a statistical indicator of how risky financial institutions or asset…

Q: You have $10,000 worth of shares of Spotify. You plan to add additional $5,000 worth of Spotify's…

A: Current value of shares: $10,000Additional value of investment: $5,000Variance of the returns of…

Q: The average returns on a portfolio of stocks are normally distributed. The average annual return is…

A: Mean return=8.25%Standard deviation=4.5%Given return=5.25%Calculate Z score and probability

Q: A portfolio with a 25% standard deviation generated a return of 15% last year when T-bills were…

A: Given: Standard deviation 25%= 0.25 Average yearly return is 15%= 0.15 And T-bill of 4.5℅= 0.045

Q: A trader has invested $100,000 in Stock A and $150,000 in Stock B. She knows the following: • Stock…

A: Investments have been made into two different stocks. For this portfolio, 10 day Value-at Risk at…

Q: Last year, damen Inc. stock had an expected rate of return of 17.3% while the market risk-premium…

A: Data given:  Expected rate of return = 17.3%  Market risk-premium = 7.0% Risk-free rate = 4.1% For…

Q: Based on current dividend yields and expected capital gains, the expected rates of return on…

A: Here, Expected ReturnBetaStandard DeviationPortfolio A11%0.810%Portfolio B14%1.531%S&P…

Q: sts of $58,792 invested in a stock that has a beta = 1.7, $71,686 invested in a stock that has a…

A: Risk-free rate4.7%Last year's portfolio required return7.4%Current year's market risk premium rises…

Q: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio…

A: T bill rate: 5%Standard deviation of market index: 26%Return of market index: 8%+T bill rate

Q: None

A: Given:Expected return on T-bills = 5% = 0.05Expected return on the S&P 500 = 13% = 0.13 (8% more…

Q: what is the expected return on this stock

A: Capital Asset Pricing Model(CAPM) is a method used for finding the relationship between the…

Q: Tyler Trucks stock has an annual return mean and standard deviation of 12.5 percent and 46 percent,…

A: Thus, the smallest expected loss for your portfolio in the coming month with a probability of 1.0…

Q: Your portfolio allocates equal funds to DW Co. and Woodpecker, Inc. DW Co. stock has an annual…

A: Here, CompanyProbabilityMeanStandard DeviationDW Co.0.510%33%WP Inc0.521%47%Correlation0

Q: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio…

A: Standard deviation is the measure of risk in the stock and standard deviation is measured as square…

Q: HR Industries (HRI) has a beta of 1.2, while LR Industries's (LRI) beta is 0.5. The risk-free rate…

A: The minimum amount of profit that the investors are expected in order to invest in specific security…

Q: Currently the S&P is returning 11% while Treasury bonds are returning 2%. If a stock has a beta of…

A: The required return for a stock is the minimum rate of return that an investor expects to earn from…

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.