1)What are the portfolio weights for a portfolio that has 152 shares of Stock A
ID: 2640675 • Letter: 1
Question
1)What are the portfolio weights for a portfolio that has 152 shares of Stock A that sell for $30 per share and 120 shares of Stock B that sell for $20 per share?
Portfolio Weights
Stock A_______
Stock B________
2)You own a portfolio that has $3,300 invested in Stock A and $4,300 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))
Portfolio Expected Return_________%
3)You own a portfolio that is 32 percent invested in Stock X, 18 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 12 percent, 18 percent, and 14 percent, respectively. What is the expected return on the portfolio?
Portfolio expected Return_________%
4)A portfolio is invested 10 percent in Stock G, 50 percent in Stock J, and 40 percent in Stock K. The expected returns on these stocks are 9 percent, 15 percent, and 19 percent, respectively. What is the portfolio's expected return?
Portfolio Expected Return ________%
5)A stock has an expected return of 12.4 percent, the risk-free rate is 4.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be?
_____Beta to stock
***NO need to show work :)
1)What are the portfolio weights for a portfolio that has 152 shares of Stock A that sell for $30 per share and 120 shares of Stock B that sell for $20 per share?
Portfolio Weights
Stock A_______
Stock B________
2)You own a portfolio that has $3,300 invested in Stock A and $4,300 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))
Portfolio Expected Return_________%
3)You own a portfolio that is 32 percent invested in Stock X, 18 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 12 percent, 18 percent, and 14 percent, respectively. What is the expected return on the portfolio?
Portfolio expected Return_________%
4)A portfolio is invested 10 percent in Stock G, 50 percent in Stock J, and 40 percent in Stock K. The expected returns on these stocks are 9 percent, 15 percent, and 19 percent, respectively. What is the portfolio's expected return?
Portfolio Expected Return ________%
5)A stock has an expected return of 12.4 percent, the risk-free rate is 4.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be?
_____Beta to stock
***NO need to show work :)
Explanation / Answer
1) There could be 2 answer for this question:
Answer 1: Weight of A in portfolio = 152 / [152 + 120] = 56.88%
Weight of B = 120 / [152 + 120] = 44.12%
Answer 2: Weight of A in portfolio = 152 * $30 / [(152 * $30) + (120 * $20] = 65.52%
Weight of A in portfolio = 120 * $20 / [(152 * $30) + (120 * $20] = 34.48%
2) The formula to calculate the return on portfolio = ?[WiXi]
Here Wi = Weight of the stock
Xi = Return of the stock
Portfolio return = 12.70%
3) Portfolio return = 14.08%
4) Portfolio return = 16%
5) CAPM (Capital Asset Pricing Model) = Cost of Equity = Risk free rate + Beta * Risk Premium
0.124 = 0.045 + [Beta * 0.10]
0.0790 = Beta * 0.10
Beta = 0.79
I hope my solution solves your query.
Regards.
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