ans all You are creating a $25,000 stock portfolio with two component investment

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You are creating a $25,000 stock portfolio with two component investments: Stock X which has a 12% expected return; and Stock Y which has expected return of 9.2%. If the goal is a portfolio with an expected return of 10.2%, what percentage of the portifolio should be invested in each stock? (3) (simple algebra) A stock has an expected return E(R) 11.6%; the Rf rate is 1.7%; and market Risk Premium (MRP) is 7.2%. What is the Bets of the stock? You own a portfolio is equally as risky as the market, what is the beta of the second risky stock? (2) (this is simple arithmetic) SlowDown, Inc is evaluating a project which has the following stream of unconventional Cash Flows (CFs): (5) If Speedway generally discounts capital project cash flows @ 14% what is this project's Modified Internal Rate of Return (MIRR) calculated using the Discounting Approach to reduce the number of sign changes to one.

Explanation / Answer

1) Let x and (1-x) be the weights implies

X*12 + (1-X)*9.2 = 10.2

X = 0.35714 OF X PORTFOLIO 0.642857 OF Y PORTFOLIO

2) EXPECTED RETURN = RF RATE + BETA *(MARKET RISK PREMIUM)

BETA =1.375

3)-1.27

4)1000*(-1450 +800 /1.14 -300 /1.14^2 + 620 /1.14^3 +620 / 1.14^4) /1450 IS MIRR

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