Verizon LTE 10:57 AM 35%) ezto.mheducation.com E connect Homework k Problems 4.
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Verizon LTE 10:57 AM 35%) ezto.mheducation.com E connect Homework k Problems 4. 166 poists You have $11,000 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 13.85 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.) Reterences Dook & Resources Dficulty: 1 BaskcSecion 11.1 Exd ???Explanation / Answer
Lets assume amount to be invested in stock X = x. Then amount to be invested in stock Y = 11000 -x
Portfolio return = 13.85%
Expected return of prortfolio = Return of X * weight of X + Return of Y * Weight of Y
15% * x/11000 + 10% * (11000 -x) / 11000 = 13.85%
0.15x +0 .1 * 11000 - 0.1 x = 11000* 0.1385
0.05x = 11000 * ( 0.1385 - 0.1)
Amount to be invested in Stock X = x = 8470.00
Amount to be invested in Stock Y = 11000 -x = 11000-8470 = 2530.00
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