Econnect Crystal Sellers BADM 363 Business Finance: Fall 2017 (AL SECTIONS Instr

Question

Econnect Crystal Sellers BADM 363 Business Finance: Fall 2017 (AL SECTIONS Instructions help Chapter 11 Homework 10.00 points Problem 11 4 Portiolio Expected Return [LO1 urn of 16 percen it and Stock Y with an expected relurn of 10 percent Assume your goal is to create a portfolo with an expected retun of 13 50 percent You have $16,000 to invest in a slock portfoio Your choices are Stock X with an expected re your answers to 2 decimall places, e.g, 32.16.) How much money wal you invest in Stock X and Stock Y? (Do not round intermediate calculations and round Investmenn in StockX hwestmert in Stock Y References eBook & Resources elum Difficuity 1 Basic Objective 11-01 Cakculate expecled retu Problem 11-4 Portfolio Expected Return Lo 11 609 PM ^d, li 12/11/2017

Explanation / Answer

Let investment in X=$x

Hence investment in Y=(16000-x)

Expected return=Respective returns*Respective weights

0.135=(x/16000*0.16)+(16000-x)/16000*0.1)

0.135*16000=0.16x+1600-0.1x

Hence x=(2160-1600)/(0.16-0.1)

Hence investment in X=$9333.33

Hence investment in Y=(16000-9333.33)=$6666.67(Approx).

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