5. Charlise has been watching the stock market and decided to invest $500,000 in Tik Tok, $200,000 in Snapchat and $300,000 in Instagram. She anticipates returns of 15%, 6% and 9% respectively. What is the expected return of her portfolio?
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- Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high-risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all her objectives? A. Invest the entire $5,000 in a stock with a beta of 1.0. B. Invest $2,500 in a stock with a beta of 1.98 and $2,500 in a stock with a beta of 1.0. C. Invest $2,500 in a risk-free asset and $2,500 in a stock with a beta of 2.0Nancy works as a wealth manager. A new client has provided Nancy with the following information about their portfolio: STOCK Holding Beta Wal-Mart $47, 000 0.35 Disney $ 39,000 1.01 Tesla $59, 000 1.93 What is the beta of the client's portfolio?James had an equity portfolio that contains $40,000 investment in Tesla (TSLA) and $60,000 investment in Microsoft (MSFT) since 2018. After seeing the stock market turmoil sparked by coronavirus, he contacted you and seek for some approaches to measure the expected losses of his portfolio. As his investment adviser, you decided to use the model building approach to measure the risk of James’ portfolio. What is the 10-day 97% value at risk for the portfolio?
- (Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turmed 21 years of age. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG) a. Based on the current portfolo composition and the expected rates of return, what is the expected rate of retum for Penny's portfolio? b. If Penny wants to increase her expected portfolio rate of retur, she can increase the alocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease her holdings of Treasury bills if Penny moves all her money out of Treasury bills and spits it evenly between the two stocks, what will be her expected rate of return? c. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio? a. Based on the current…Suppose Stella invests $20,000 in Facebook stock, and $30,000 in HoneywellInternational stock. She expects a return of 16% for Facebook and 10% for Honeywell. Whatis her portfolio’s expected return? Round your answer to two decimal places.A. 11.50%B. 12.40%C. 13.00%D. 13.60%E. 14.50%Teena is considering investing in Stock A and stock B. She plans to invest $ 25,000 in the low risk stock and $ 50,000 in the high-risk stock. You have been given the following information about these two stocks in the table below:StockABE(R)15%10?25%22%Correlation between A and B0.20Based on the given information above, you are required to:i. Calculate the portfolio weightsii. Calculate the portfolio return.iii. Calculate the portfolio risk.iv. Compare portfolio risk with the individual stock risks and identify the benefit of the diversification of the portfolio.
- James had an equity portfolio that contains $40,000 investment in Tesla (TSLA) and $60,000 investment in Microsoft (MSFT) since 2018. After seeing the stock market turmoil sparked by coronavirus, he contacted you and seek for some approaches to measure the expected losses of his portfolio. As his investment adviser, you decided to use the model building approach to measure the risk of James’ portfolio. What is the 10-day 97% value at risk for TSLA and MSFT, respectively?Rachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13 500 of Share A, $7600 of Share B, $14 700 of Share C, and $5 500 of Share D. Required:a) Compute the weights of the assets in Rachel’s portfolio?b) If Rachel’s portfolio has provided her with returns of 9.7%, 12.4%, - 5.5% and 17.2% over the past four years, respectively. Calculate the geometric average return of the portfolio for this period. c) Assume that expected return of the stock A in Rachel’s portfolio is 13.6% this year. The risk premium on the stocks of the same industry are 4.8%, betas of these stocks is 1.5 and the inflation rate was 2.7%. Calculate the risk-free rate of return using Capital Market Asset Pricing Model (CAPM).d) Following is forecast for economic situation and Rachel’s portfolio returns next year, calculate the expected return, variance and standard deviation of the portfolio.State of economyMild Recession…Rachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13,500 of Share A, S7,600 of Share B, $14,700 of Share C, and s5,500 of Share D. Required: 1. Compute the weights of the assets in Rachel's portfolio? 1. If Rachel's portfolio has provided her with returns of 9.7%, 12.4%, -5.5% and 17.2% over the past four years, respectively. Calculate the geometric average return of the portfolio for this period. 1. Assume that expected return of the stock A in Rachel's portfolio is 13.6% this year. The risk premium on the stocks of the same industry are 4.8%, betas of these stocks is 1.5 and the inflation rate was 2.7%. Calculate the risk-free rate of return using Capital Market Asset Pricing Model (CAPM). 1. d) Following is forecast for economic situation and Rachel's portfolio returns next year, calculate the expected return, variance and standard deviation of the portfolio. State of economy Probability Rate…
- ) An investor has $5,000 invested in a stock which has an estimated beta of 1.2, and another $15,000 invested in the stock of the company for which she works. The risk-free rate is 6 percent and the market risk premium is also 6 percent. The investor calculates that the required rate of return on her total ($20,000) portfolio is 15 percent. What is the beta of the stock of the company for which she works?Rachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13,500 of Share A, $7,600 of Share B, $14,700 of Share C, and $5,500 of Share D. Required: a) Compute the weights of the assets in Rachel's portfolio? b) If Rachel's portfolio has provided her with returns of 9.7%, 12.4%, -5.5% and 17.2% over the past four years, respectively. Calculate the geometric average return of the portfolio for this period. c) Assume that expected return of the stock A in Rachel's portfolio is 13.6% this year. The risk premium on the stocks of the same industry are 4.8%, betas of these stocks is 1.5 and the inflation rate was 2.7%. Calculate the risk-free rate of return using Capital Market Asset Pricing Model (CAPM). d) Following is forecast for economic situation and Rachel's portfolio returns next year, calculate the expected return, variance and standard deviation of the portfolio.I State of economy Probability Rate of…Ross Law is presented with a client's problem. They have a portfolio of P10,000 investment in each of 20 different stocks in PSE. Portfolio beta is 1.2. They have decided to sell one of their stock that has a beta of 0.7 for P10,000. They plan to use the proceeds to buy another stock with a beta of 1.4. What will be the new portfolio beta?