Investments: Financial Stocks (Compare Exercise 41 in Section 6.1.) During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share. 19 You have up to $25,000 to invest in these stocks and would like to earn at least $760 in dividends over the course of a year. (Assume the dividend to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index?
Investments: Financial Stocks (Compare Exercise 41 in Section 6.1.) During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share. 19 You have up to $25,000 to invest in these stocks and would like to earn at least $760 in dividends over the course of a year. (Assume the dividend to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index?
Solution Summary: The author calculates the number of shares of TD and CAN and the minimum total risk index.
Investments: Financial Stocks (Compare Exercise 41 in Section 6.1.) During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was expected to yield 4% per year in dividends, and had a risk index of 3.0 per share, while CNA Financial Corp. (CNA) stock cost $40 per share, was expected to yield 2.5% per year in dividends, and had a risk index of 2.0 per share.19 You have up to $25,000 to invest in these stocks and would like to earn at least $760 in dividends over the course of a year. (Assume the dividend to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index?
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