EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 8, Problem 6PROB
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The investment in stock 1 is $9,000 and its return is 18%. The investment in other stock is $21,000 and its return is 8%.
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You own a portfolio that has $2,600 invested in Stock A and $3,700 invested in Stock B. Assume the expected returns on these stocks are 11 percent and 17 percent, respectively. What is the expected return on the portfolio?
An individual has $20,000 invested in a stock with a beta of 0.6 and another $75,000 invested in a
stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio's
beta?
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Beta
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- You have $19,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 10 percent. Assume your goal is to create a portfolio with an expected return of 13.15 percent. How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Investment in Stock X Investment in Stock Yarrow_forwardYou own a portfolio that has $1,800 invested in Stock A and $2,900 invested in Stock B. If the expected returns on these stocks are 9% and 15%, respectively, what is the expected return on the portfolio?arrow_forwardYou own a portfolio that is 17 percent invested in Stock X, 32 percent in Stock Y, and 51 percent in Stock Z. The expected returns on these three stocks are 12 percent, 15 percent, and 17 percent, respectively. What is the expected return on the portfolio?arrow_forward
- You have a portfolio worth $78,500 that has an expected return of 11.9 percent. The portfolio has $17,500 invested in Stock O, $25,300 invested in Stock P, with the remainder in Stock Q. The expected return on Stock O is 18.7 percent and the expected return on Stock P is 11.9 percent. What is the expected return on Stock Q?arrow_forward) 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?arrow_forwardHow do I calculate the Portfolio Expected Return: You own a portfolio that has $4,600 invested in Stock X and $5,200 invested in Stock Z. What is the expected return on the portfolio if the expected returns on these stocks are 9.75 percent and 16.50 percent?arrow_forward
- You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 12.4 percent and Stock Y with an expected return of 10.1 percent. If your goal is to create a portfolio with an expected return of 10.85 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Stock X Stock Yarrow_forwardYou own a portfolio that is 22 percent invested in Stock X, 37 percent in Stock Y, and 41 percent in Stock Z. The expected returns on these three stocks are 12 percent, 15 percent, and 17 percent, respectively. What is the expected return on the portfolio? Expected return _________%arrow_forwardAn investor has $70,000 invested in a stock that has an estimated beta of 1.25, and another $30,000 invested in the stock of the company for which she works. The risk-free rate is 3.2% and the market risk premium is 6.8%. The investor calculates that the required return on her portfolio is 11.5%. What is the beta of the company for which she works?arrow_forward
- a. Calculate the average rate of return for each stock during the 5-year period. b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? c. Calculate the standard deviation of returns for each stock and for the portfolio. d. If you are a risk-averse investor, then, assuming these are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why? You have observed the following returns over time: Year Stock X Stock Y Market 2009 14% 13% 12% 2010 19 7 10 2011 -16 -5 -12 2012 3 1 1 2013 20 11 15arrow_forwarda) Assume that you bought 200 stock B in your portfolio for total investment of $1200, now the market price of the stock is $75, the dividend paid for this stock is $2 each year. How much is the capital gain of this stock? b) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? A B Expected return 12.50% 18.50% Standard Deviation of return 15% 20% Correlation of coefficient (p) 0.4arrow_forwardYou own a portfolio that has a total value of $215,000 and invested it is invested in Stock D with a beta of .86 and Stock E with a beta of 1.39. The beta of your portfolio is equal to the market beta. What is the dollar amount of your Investment in Stock D?arrow_forward
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Investing For Beginners (Stock Market); Author: Daniel Pronk;https://www.youtube.com/watch?v=6Jkdpgc407M;License: Standard Youtube License