5. Your stock portfolio consists of the following investments: Company A B C Investment A. 1.73 B. 1.88 C. 2.03 D. 2.17 E. 2.40 $ 400 $ 600 $1,000 Standard Deviation 1.5 2.0 3.0 Beta 1.2 1.8 2.2 Expected Return 9% 10% 12% Using the appropriate measure of portfolio risk, calculate your portfolio level of risk.

5. Your stock portfolio consists of the following investments: Company A B C Investment A. 1.73 B. 1.88 C. 2.03 D. 2.17 E. 2.40 $ 400 $ 600 $1,000 Standard Deviation 1.5 2.0 3.0 Beta 1.2 1.8 2.2 Expected Return 9% 10% 12% Using the appropriate measure of portfolio risk, calculate your portfolio level of risk.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Consider a portfolio comprise of three securities in the following proportion and with the indicated securities beta. Security Amount Invested Beta Expected return A 1.5million 1.0 12% B 1million 1.5 13.5% C 2million 0.8 9% Calculate the portfolio’s; Beta Expected return Determine whether this portfolio have more or less systematic risk than an average asset.
Compute the portfolio risk if stock A and Stock B are combined in a portfolio in the ratio 6:4 respectively.
Given the following information on a investment portfolio: Stock Name Expected returns $invested in stock Standard deviation of returntesla 15.5% 3750 10.3%microsoft 9.8% 5000 5.6%pfizer 13.8% 1250 12% Which stock should have the most systematic risk?
Suppose we have the following information: Securit Amount Invested Expected Return Beta Stock A RM1 ,OOO 8% 0.80 Stock B RM2,OOO 12% 0.95 Stock C RM3,OOO 15% 1.10 Stock D RM4,OOO 18% a) Compute the expected return on this portfolio. b) Calculate the beta of the portfolio. c) Does this portfolio have more or less systematic risk than an average asset? Explain.
Assume the risk-free rate is r = 3%. Consider the data in the table below: Stock Expected Return Volatility Stock 1 15% 40% Stock 2 7% 30% acompute (c) Determine the tangent portfolios & their respective mean returns and volatilities
calculate portfolio risk and return based on following combination: 70% invested in Stock A, 30% in Stock B
A portfolio has three stocks. Their portfolio weights and expected returns are as follows. Weight E(r) Stock A 0.4 22% Stock B 0.4 4% Stock C 0.2 -18% What is the expected return on the portfolio?
Returns on stocks X and Y are listed below: Period 1 2 3 4 5 6 7 Stock X -1% -1% 9% 9% 1% -2% 5% Stock Y -3% 4% 12% -4% 5% 4% 5% Consider a portfolio of 20% stock X and 80% stock Y. What is the mean of portfolio returns?
You form a portfolio by investing equally in four securities: stock A, stock B, the risk-free security, and the market portfolio. What is the beta of your portfolio if bA = .8 and bB = 1.2?
The following questions are based on the given information from table of probabilitydistributions of returns on investment individual shares and portfolio below:Table 3: Probability distributions of returns on investment for individual shares and portfolio. State ofEconomy Probabilityof theStates Return onShare A(rA) Return onShare B(rB) Return on Portfolio AB(rAB)1 0.20 15% -5% 5%2 0.20 -5% 15% 5%3 0.20 5% 25% 15%4 0.20 35% 5% 20%5 0.20 25% 35% 30% Given: By using the above information, demonstrate the rate of risk (variance and standarddeviation) for each of:(i) Share A (ii) Share B (iii) Portfolio A and B
QG. The following information is available about the stocks of two companies A and B: Stock A Stock B Expected Return (%) Probability -5 12 15 20 0.05 0.55 0.35 0.05 Expected Return (%) Probability 5 15 18 20 0.05 0.65 0.20 0.10 Stock Standard Deviation of Returns (%) A B 25 35 The coefficient of correlation between the returns on A and B is 0.05. A portfolio is constructed by allocating the funds between A and B in the ratio of 2:3. Calculate the expected return on the portfolio. b. Calculate the portfolio risk.
Questions: a. Compute the expected return for stock X and for stock Y b. Compute the standard deviation for stock X and for stock Y. c. Determine the best course to take for investing.

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