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    Risk and Return for a Four-Stock Portfolio

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    Here are four publicly traded companies: Amazon.com, Dolby, Nokia, and Netflix.

    Each compromises 25% of the portfolio which totals 100% for the four stocks. Calculate using EXCEL the Beta and expected return for the stocks. Show all calculations. Do not simply obtain Beta from online sources such as YAHOO! finance.

    © BrainMass Inc. brainmass.com October 1, 2020, 10:56 pm ad1c9bdddf

    Solution Preview

    Stock Risk Free Rate* +[ Beta *( Market Return** - Risk Free Rate* ) Expected Return***
    Amazon (NASDAQ: AMZN) 6.03% 1.53 9.13% 6.03% 6.08%
    Dolby (NYSE: DLB) 6.03% 1.14 9.13% 6.03% 6.07%
    Nokia (NYSE: NOK) 6.03% 1.70 9.13% 6.03% 6.08%
    Netflix (NASDAQ: NFLX) 6.03% 0.99 9.13% 6.03% 6.06%
    * The returns on the 30-year bond is used
    ** to compute the Market Return, I used the weekly closing prices of the S&P 500 index from January 4, 2007 to May 18, 2009. I computed ...

    Solution Summary

    This solution shows step-by-step calculations in an Excel file to determine the beta and the expected return for stocks in Amazon, Dolby, Nokia and Netflix.