Thank you for your assistance on the following hypothetical example.

Suppose you have invested $30,000 in the following four stocks:

Security Amount Invested Beta
Stock A $5,000 0.75
Stock B $10,000 1.1
Stock C $8,000 1.36
Stock D $7,000 1.88

The risk-free rate is 4 percent and the expected return on the market portfolio is
15 percent. Based on the capital-asset-pricing model, what is the expected return on the above portfolio?

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Thank you for your assistance on the following hypothetical example.

Suppose you have invested $30,000 in the following four stocks:

Security ...

Solution Summary

This expected the calcualtion of expected return on the above portfolio

A portfolio is entirely invested into Buzz's Bauxite Boring Equity, which is expected to return 16%, and Zum's Inc. bonds, which are expected to return 8%. Sixty percent of the funds are invested in Buzz's and the rest in Zum's. What is theexpectedreturn on theportfolio?

Is one of theportfolio's expectedreturn not in line with the fractor model relationship? Which one? Can you construct a combination of the other two portfolios that has the same factor sensitivity as the "out-of-line" portfolio? What is theexpectedreturn of that combination? What action would you expect investors to take wit

1. Why are bond market indices more difficult to construct and maintain than stock market indices?
2. An investor wishes to construct a portfolio consisting of a 70% allocation to a stock index and a 30% allocation to a risk free asset. Thereturn on the risk-free asset is 4.5% and theexpectedreturn on the stock index is 1

Consider a Treasury Bill with a rate of return of 5% and the following portfolios, which have been created by 2 stocks, S1 and S2:
Portfolio A: The weight for S1 and S2 = 0.2 and 0.8; Expectedreturn = 0.15; Standard Dev.= 0.24
Portfolio B: The weight for S1 and S2 = 0.4 and 0.6; Expectedreturn = 0.18; Standard Dev.= 0.3

What is theexpectedreturn on a portfolio if an equal amount is invested in each stock? What would be expectedreturn if 50 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C?
Stock A 7%
Stock B 12
Stock C 20
You are considering two stocks and have determined

Stock A has an expectedreturn of 10% and a beta of 1.0. Stock B has a beta of 2.0. Portfolio P is a two-stock portfolio, where part of theportfolio is invested in Stock A and the other part is invested in Stock B. Assume that the risk-free rate is 5% and that the market is in equilibrium. Portfolio P has an expectedreturn of

5.13 in Ch. 5
Expectedreturn
Year Stock L Stock M
2010 14% 20%
2011 14 18
2012 16 16
2013 17 14
2014 17 12
2015 19 10
P5รข?"13 Portfolioreturn and standard deviation Jamie Wong is considering building an investment portfolio containing two stocks, L and

Based on current dividend yields and expected capital gains, theexpected rates of return on portfolios A and B are 11% and 14%, respectively. The beta of A is 0.8, while that of B is 1.5. The T-bill rate is currently 6%, whereas theexpected rate of return of the S&P 500 index is 12%. The standard deviation of portfolio A is 10

Financial Calculations: Portfolio Weights and ExpectedReturn
You own a portfolio of 250 shares of firm A worth $60/share and 1500 shares of firm B worth $40/share. You expect a return of 4% for stock A and a return of 9% for stock B. Please provide the calculations for the given problems in an Excel spreadsheet.
(a) What