You decide to invest in a portfolio consisting of 15 percent Stock X, 51 percent Stock Y, and the remainder in Stock Z. Based on the following information, what is the standard deviation of your portfolio? State of Probability of Economy Normal Boom State Economy .77 .23 Return if State Occurs Stock X Stock Y Stock Z 10.50% 17.80% 3.90% 25.80% 12.90% 17.30%

You decide to invest in a portfolio consisting of 15 percent Stock X, 51 percent Stock Y, and the remainder in Stock Z. Based on the following information, what is the standard deviation of your portfolio? State of Probability of Economy Normal Boom State Economy .77 .23 Return if State Occurs Stock X Stock Y Stock Z 10.50% 17.80% 3.90% 25.80% 12.90% 17.30%

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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a. Using the data provided in problem 3, determine the return and risk for a portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT and 15% in GOOG.b. How would the portfolio be affected if you distributed your investment in the following way: 30% in ADRE; 25% on MSFT and 45% on GOOG?c. Which of the two portfolios would a risk seeking investor prefer and why?
You construct a two-stock portfolio using stock A and stock B. You invest $700 in stock A and $300 in stock B. The return standard deviation of stock A is 15%, that of stock B is 20%, and the return correlation coefficient between stock A and stock B is 0.6. The return standard deviation of your portfolio is _____. 13.57% 14.89% 16.50% 17.50%
Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.59, 0.89, 1.05, and 1.31, respectively and the beta of portfolio 1 is 0.96, the beta of portfolio 2 is 0.87, and the beta of portfolio 3 is 1.05. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 12.0% (slope of the line)? ..... What is the expected return of stock P? % (Round to two decimal places.)
A close family friend has approached you to help her determine which of the two common stocksshe should invest in. Common Stock A Common Stock BProbability Return Probability Return 0.3 11% 0.2 -5% 0.4 15% 0.3 6% 0.3 19% 0.3 14% 0.2 22%Required:a) Calculate the expected returns of stock A b) Determine the risk (standard deviation) and return of stock Ac) Calculate the expected returns of stock B d) Determine the risk (standard deviation) and return of stock Be) Which investment should your friend invest in?
Aa.5
Qn4: Assume a two-stock portfolio created with $50,000 is invested in both HT and Collections. The expected returns are given below: Calculate the portfolio's return for each state of economy and fill them in the last column, under "Portfolio" (Hint: The portfolio's expected return is a weighted average of the returns of the portfolio's component assets). Calculate the portfolio's expected return (Hint: You have to incorporate the probability distribution of each state of economy). Calculate the portfolio's standard deviation. Economy Recession Below average Average Above average Boom Prob. HT 0.1 -27.0% 0.2 -7.0% 0.4 15.0% 0.2 30.0% 0.1 45.0% Coll 27.0% 13.0% 0.0% -11.0% -21.0% Portfolio
You own a stock portfolio invested 15 percent in Stock Q, 15 percent in Stock R, 5 percent in Stock S, and 65 percent in Stock T. The betas for these four stocks are 0.43, 0.95, 1.02, and 1.12, respectively. What is the portfolio beta? Multiple Choice 0.99 0.94 0.97 1.04 1.01
You have a portfolio that is 33 percent invested in Stock R, 17 percent invested in Stock S, with the remainder in Stock T. The expected return on these stocks is 9.4 percent, 10.8 percent, and 13.1 percent, respectively. What is the expected return on the portfolio? Multiple Choice 11.10% 11.29% 11.49% 12.05% 10.18%
You decide to invest in a portfolio consisting of 25 percent Stock A, 35 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? Probability of State of Economy Return if State Occurs State of Economy Stock A Stock B Stock C 0.4 -12% 4% 1% Bear Normal 0.2 5% 8% 8% Bull 0.4 28% 12% 17% O A. 8.80% O B. 9.16% OC. 7.40% O D.8.17%
There are three stocks, A, B, and C, with the following expected return, volatility, and correlation data. You are asked to generate a mean-variance portfolio, the expected return of which should be no less than 8%. What’s your optimal allocation (portfolio weights) for those three stocks?
An investor has a 2-stock portfolio with $25,000 invested in Stock X and $50,000 invested in Stock Y. X's beta is 1.50 and Y s beta is 0.60. What is the beta of the investor's portfolio?
Assume a two-stock portfolio with $50,000 invested in Stock A and $30,000 invested in Stock B. The expected return of Stock A is 12% and the expected return of Stock B is -2%. What's the expected portfolio return? Group of answer choices 7.50% 6.75% 10.0% 6.0%

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