Purchase Solution

Expected Return

Not what you're looking for?

Ask Custom Question

In order to fund her retirement, Glenda requires a portfolio with an expected return of 12 percent per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns of 9 percent and 10 percent per year, respectively, then what is the minimum expected annual return for Stock 3 that will enable Glenda to achieve her investment requirement?

Excel format please

Purchase this Solution
Solution Summary

Stock return to enable investment requirement has been calculated.

Solution Preview

The answer to the question is in the attached Excel File:

In order to fund her retirement, Glenda requires a portfolio with an expected return of 12 percent per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns of 9 percent and 10 percent per year, respectively, then what is the minimum expected annual return for Stock 3 that will enable Glenda to achieve her investment requirement?

proportion invested in ...

Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • What does the Beta of a Stock Mean?

    rate)) Expected return on a stock = .05 +(1*(.15-.05)) Expected return on a stock = .05 +.10 Expected return on a stock = .15 The expected return on a stock with a beta=2 will be: Expected return on a stock = Risk-free-rate + (Beta*(Expected

  • Finance : Expected Return and Risk

    (Expected portfolio return) Musumeci Capital Management has invested its portfolio as shown here. What is Musumeci's expected portfolio return?

  • expected return on a stock with a beta=2.0 twice

    197312 Is the expected return on a stock with a beta=2.0 twice the expected return on a stock with a beta? Is the expected return on a stock with a beta=2.0 twice the expected return on a stock with a beta?

  • Expected Return

    Risk free rate = 6% Beta = 1.25 Expected return on the market = 13% Expected Return using the CAPM equation is Expected return = Risk free rate + (Expected Return on Market-Risk free rate) X beta Expected Return = Rf + (Rm-Rf) X beta Expected

  • Answer to "expected return" question

    The new expected return is Expected Return = 4% + (14.7%-4.9%) X 1.3 Expected Return = 16.74% The solution explains how to calculate the expected return using the CAPM equation

  • expected excess return

    B, it offers an expected excess return of 1.8% 4. B, it offers an expected return of 2,4% 5.

  • Expected rate of return on the portfolio

    expected total return can be calculated as Expected rate of return = Sum (Probability X Return) Expected rate of return = 0.1 X 15% + 0.85 X 12.67% + 0.05 X -2.33% Expected rate of return = 12.15% The solution explains how to calculate the expected

  • Expected Return and Beta Risk

    113625 Expected return / beta 17. The expected return on the market is 13% and the risk-free rate is 5%. Your portfolio has a beta of 1.3. What is the expected return on your portfolio? 18. What is the beta of the following portfolio?

  • Calculating the expected returns

    Calculate the expected return from Dell. b. Find the highest expected return that is offered by one of these stocks. c. Find the lowest expected return that is offered by one of these stocks. d.

View More Related Solutions