You are given the following information about a portfolio consisting of stocks X, Y, and Z: Stock Investment Expected Return 10,000 8% Y 15,000 12% 25,000 16% Calculate the expected return of the portfolio.
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: A portfolio consists of $17,600 in Stock M and $29,400 Invested in Stock N. The expected return on…
A: Given:
Q: Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Amount…
A: Beta of portfolio is weighted average beta of individual securities. Beta is called as systematic…
Q: You own a portfolio that is 25 percent invested in Stock X, 35 percent in Stock Y, and 40 percent in…
A: Portfolio is the collection of different securities. portfolio return formula: portfolio return…
Q: You own a portfolio that has $2,450 invested in Stock A and $3,250 invested in Stock B. If the…
A: Expected rate of return on portfolio = [(Weight of stock A * Return on stock A) + ( weight of stock…
Q: You own a portfolio that is 28 percent invested in Stock X, 43 percent in Stock Y, and 29 percent in…
A: Portfolio is the collection of securities. portfolio return formula: portfolio return =∑nwn×rn…
Q: A portfolio has three stocks. Their portfolio weights and expected returns are as follows.…
A: The expected return on a portfolio indicates the overall expected return from the portfolio. The…
Q: You own a portfolio that has $2,600 invested in Stock A and $3,700 invested in Stock B. Assume the…
A: The expected return of the portfolio is the weighted average return
Q: You own a portfolio that has $3,200 invested in Stock A and $4,200 invested in Stock B. If the…
A: Value of stock A = $3,200 Value of stock B = $4,200 Value of portfolio ($3,200 + $4,200) = $7,400…
Q: A portfolio is invested 25 percent in Stock G, 55 percent in Stock J, and 20 percent in Stock K. The…
A: The expected return from the portfolio is calculated by multiplying the probability by its…
Q: You own a portfolio that has $3,000 invested in Stock A and $4,100 invested in Stock B. Assume the…
A: The expected return on portfolio is calculated as weighted proportion of stock multiplied by the…
Q: Assume that you formed a portfolio of three stock A,B,C. The return for stock A is 10%, the return…
A: Portolio return is calculated by sum product of return of security and their respective rate.…
Q: How do I calculate the Portfolio Expected Return: You own a portfolio that has $4,600 invested in…
A: In this question we are required to calculate expected return of our portfolio having two stocks…
Q: Assume a portfolio is made up of three stocks: Expected Return Investment Beta Stock A 18% $150,000…
A: First weights of each stock in the investment is calculated as investment in stock divided by total…
Q: We have the following information on a portfolio consisting of Stocks A, B, and C:…
A: Annual expected portfolio return refers to the amount of profit that will be realized from portfolio…
Q: You own a portfolio that is invested 32% in share A, 43% in share B and the remainder in share C.…
A: Expected return on share A = 11.5% Expected return on share B = 15.2% Expected return on share C =…
Q: You own a portfolio that is 26 percent invested in Stock X, 41 percent in Stock Y, and 33 percent in…
A: Formula: Expected return of portfolio=∑i=1nWi×ri
Q: What is the expected return for the following portfolio? (State your answer in percent with two…
A: Solution:- Expected return for the portfolio (in percentage) = Summation of (Weight of Asset x…
Q: What is the expected return for the following portfolio? (State your answer in percent with two…
A: The question is related to Expected Return of Portfolio. The expected return of Portfolio is…
Q: Assume you have invested in two other stocks: Stock A has a beta of 1.20 and Stock B has a beta of…
A: Required return calculation is wrong. Correct solution is provided below.…
Q: The following information for Stock A, Stock B and Stock C are given: State of Economy Probability…
A: Here, Proportion invested in Stock A is 20% Proportion invested in Stock B is 35% Proportion…
Q: A portfolio is invested 27 percent in Stock G, 42 percent in Stock J, and 31 percent in Stock K. The…
A: The expected return of a portfolio refers to the sum of proportionate returns from each element of…
Q: Assume that you own a portfolio consisting of the following stocks: Stock Percentage of Portfolio…
A: The expected return on a portfolio calculates the expected value of a portfolio. The probability…
Q: Returns State of Probability of State of Economy Economy Stock A Stock B Stock C Boom .40 15% 18%…
A: Expected return = weighted average return of the stocks in portfolio Stock A = 35% Stock B = 45%…
Q: You own a portfolio that has $2,600 invested in Stock A and $3,700 invested in Stock B. Assume the…
A: The expected return is the return of the portfolio which is the sum of each potential return that is…
Q: You have a portfolio that is invested 22 percent in Stock A, 32 percent in Stock B, and 46 percent…
A: Beta of portfolio is weighted average beta of individual stock's beta
Q: A two-share portfolio held by an institutional investor has the following information: Years (t)…
A: We will first calculate the standard deviation of the portfolio including ABC & XYZ and…
Q: Suppose you have portfolio of four stocks Stock A, B, C and D, Total investment in these stocks is…
A: According to CAPM required rate is equivalent to risk free rate plus market risk premium.
Q: You have a portfolio with the following: Stock Number of Shares Price Expected Return W…
A: Information Stock Number of shares Price Expected return W 875 52 14% X 775 29 18% Y 525 65…
Q: A portfolio is invested 22 percent in Stock G, 26 percent in Stock J, with remainder in Stock K. The…
A: The formula to calculate portfolio expected return is given below:
Q: Consider the following scenario analysis for stocks X and Y. Assume that you have a portfolio worth…
A: PROBABILITIES STOCK X A B A X B 0.2 -20% -0.04 0.5 18% 0.09 0.3 50% 0.15 EXPECTED…
Q: You own a portfolio that has $2,800 invested in Stock A and $3,900 invested in Stock B. Assume the…
A: Portfolio return is the gain or loss realized investment portfolio with different stock. formula:…
Q: a. What is the standard deviation of portfolio Q? (Calculate using numbers in decimal form, not…
A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…
Q: Based on the table below, you invested 40% on Stock A and B and 20% on Stock Calculate the expected…
A: Expected return The expected return refers to the profit or loss that is anticipated by an investor…
Q: If you have an investment portfolio which is a mix of stock and bonds, with the stocks having a…
A: Information Provided: Stock return = 1.2% Stock weightage = 30% Bond return = 3.5% Bond weightage =…
Q: Calculate the expected return on the following portfolio, consisting of Stocks A, B & C: Stock A:…
A: Portfolio refers to basket of different financial assets in which investment is made by single…
Q: A two-share portfolio held by an institutional investor has the following information: Years (t)…
A: To Find: Standard Deviation
Q: You decide to invest in a portfolio consisting of 25 percent Stock A, 35 percent Stock B, and the…
A: Expected Return: The expected return is the minimum required rate of return which an investor…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: The measure of amount of variation of a set of values is called as standard deviation. It is the sum…
Q: You own a portfolio that has $1,600 invested in Stock A and $2,700 invested in Stock B. Assume the…
A: Expected return of portfolio = (weight of stock A × Expected return of A) + (weight of stock B ×…
Q: a. You expect an RFR of 10 percent and the market return (RM) of 14 percent. Compute the expected…
A: Part (a)RFR = 10%The market return, RM = 14%The expected return for a stock using CAPM equation is:…
Q: A portfolio consists of $38,312 of Stock A, $42,509 of Stock B, and $11,516 of Stock C. The expected…
A: Data given: Stock Return (%) Investment ($) A 6.85 38312 B 12.08 42509 C 15.92 11516…
Q: Your portfolio is comprised of 20% of stock X, 40% of stock Y, and the rest in stock Z. Stock X has…
A: Expected return on portfolio = (Weight of X * Return of X) + (Weight of Y* Return of Y) + (Weight of…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: Formulas:
Q: You own a portfolio that is 32% invested in Stock X, 20% in Stock Y, and 48% in Stock Z. The…
A: Return means the benefits received from the investment made by the investor. If an investor takes…
Q: You own a portfolio that has a total value of $215,000 and invested it is invested in Stock D with a…
A: Given: Total value of investment = $215,000 Stock D beta = 0.86 Stock E beta = 1.39
Q: Stock Investment Expected Return A $ 5,000 12% B 10,000 10 C 15,000 14
A: The expected return for an investment portfolio is the weighted average of the expected return of…
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.
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- Suppose we have the following information: Securit Amount Invested Expected Return Beta Stock A RM1 ,OOO 8% 0.80 Stock B RM2,OOO 12% 0.95 Stock C RM3,OOO 15% 1.10 Stock D RM4,OOO 18% a) Compute the expected return on this portfolio. b) Calculate the beta of the portfolio. c) Does this portfolio have more or less systematic risk than an average asset? Explain.Assume the risk-free rate is r = 3%. Consider the data in the table below: Stock Expected Return Volatility Stock 1 15% 40% Stock 2 7% 30% acompute (c) Determine the tangent portfolios & their respective mean returns and volatilitiesYou are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio X Y Z Market Risk-free Rp 14.0% 13.0 .8.5 12.0 7.2 Ор 39.00% 34.00 24.00 29.00 0 Bp 1.50 1.15 0.90 1.00 0 Assume that the correlation of returns on Portfolio Y to returns on the market is 0.90. What percentage of Portfolio Y's return is driven by the market? Note: Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places. R-squared
- You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio Y Z Market Risk-free Rp 13.5% бр 35.00% 12.5 30.00 7.1 20.00 10.6 4.4 25.00 0 Вр 1.55 1.20 0.80 1.00 0 Assume that the correlation of returns on Portfolio Y to returns on the market is 0.70. What percentage of Portfolio Y's return is driven by the market? Note: Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places. × Answer is complete but not entirely correct. R-squared 0.9785Consider an investment portfolio that consists of three different stocks, with the amount invested in each asset shownbelow. Assume the risk-free rate is 2.5% and the market risk premium is 6%. Use this information to answer thefollowing questions.Stock Weights BetasChesapeake Energy 25% 0.8Sodastream 50% 1.3Pentair 25% 1.0a) Compute the expected return for each stock using the CAPM and assuming that the stocks are all fairly priced.b) Compute the portfolio beta and the expected return on the portfolio.c) Now assume that the portfolio only includes 50% invested in Pentair and 50% invested in Sodastream (i.e., a twoassetportfolio). The yearly-return standard deviation of Pentair is 48% and the yearly-return standard deviation ofSodastream is 60%. The correlation coefficent between Pentair’s returns and Sodastream’s returns is 0.3 What is theexpected yearly-return standard deviation for this portfolio?You are given the following information concerning three portfolios, the market portfolio, and the risk- free asset: Portfolio X Y Z Market Risk-free Rp 14.5% R-squared 13.5 9.1 10.7 5.4 op 36% 31 21 26 0 6p 1.60 1.30 .80 1.00 0 Assume that the correlation of returns on Portfolio Y to returns on the market is 72. What percentage of Portfolio Y's return is driven by the market? (Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places.)
- You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio Y Z Market Risk-free Rp 16.00% бр 32.00% 15.00 27.00 7.30 17.00 11.30 5.80 22.00 0 Bp 1.90 1.25 0.75 1.00 0 Assume that the tracking error of Portfolio X is 13.40 percent. What is the information ratio for Portfolio X? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places. Information ratioYou are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio X Y Z Market Risk-free Rp 11.0% ор 33.00% 10.0 28.00 8.1 10.4 5.2 18.00 23.00 Ө вр 1.45 1.20 0.75 1.00 Ө Assume that the correlation of returns on Portfolio Y to returns on the market is 0.66. What percentage of Portfolio Y's return is driven by the market? Note: Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places. R-squaredA portfolio has three stocks. Their portfolio weights and expected returns are as follows. Weight E(r) Stock A 0.4 22% Stock B 0.4 4% Stock C 0.2 -18% What is the expected return on the portfolio?
- Consider a $30,000 portfolio consisting of three stocks. Their values and expected returns are as follows (refer to image): What is the weighted-average expected return on the portfolio?You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: 8p 1.70 1.30 0.85 1.00 Portfolio X Y Z Market Risk-free Rp 11.5% 10.5 7.2 10.9 4.6 R-squared op 38.00% 33.00 23.00 28.00 0 Assume that the correlation of returns on Portfolio Y to returns on the market is 0.76. What percentage of Portfolio Y's return is driven by the market? Note: Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places.A stock portfolio has the following returns under the market conditions listed below. Market Condition Probability Return Bull 0.4 $ 200 Stable 0.3 $100 Bear 0.3 - $100 Referring to Scenario 20-4, what is the EMV?