Compute expected return on a portfolio

Reference no: EM1364760

What is the expected return on a portfolio if an equal amount is invested in each stock? What would be expected return 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 the following information.

Stock A
Return Probability of the Return
18% 25%
14 50
10 25

Stock B
Return Probability of the Return
22% 10%
12 60
11 30

A. Which of the two stocks has the higher expected return?
B. Which stock is riskier?
C. Given your answers to the two previous questions, what stock is preferred?

Reference no: EM1364760

Questions Cloud

Compute the diameter of the bright circular spot formed : compute the diameter of the bright circular spot formed.

Equivalent units of production : Compute the equivalent units of production for materials and conversion costs for the month of August. Compute the unit costs for materials and conversion costs for the month. Determine the costs to be assigned to the units transferred out and in pro..

Strategic management - able corporation : How would you go about defining the identity of Able Corporation and creating its mission statement and what principle would you use in order to prioritize the implementation steps needed to accomplish the strategic objectives?

What is the velocity of plane with respect to the ground : what is the velocity of plane with respect to the ground. A nonconducting sphere has radius R = 2.53 cm and uniformly distributed charge q = +6.00 fC. Take an electric potential at the sphere's center to be V0 = 0.

Compute expected return on a portfolio : Determine the expected return on a portfolio if an equal amount is invested in each stock? What would be expected return if 50% of your funds.

Write a paper of 5-7 pages : a. Major firms in the industry. I already picked should be on telcommunications b. Size of the industry in country, and internationally. c. Current challenges and future opportunities in the industry.

What volume of water : A grating with 633 slits/cm is illuminated with light of wavelength 419 nm. What is the highest-order number that might be observed with this grating.

How personal and work life differ due to networks : Explain how network standards define your network and create a homogeneous environment that is easier to manage and is more reliable - Describe the concepts and applicability of basic network protocols.

Compute appropriate risk-adjusted discount rate : A Corporation is evaluating two systems. The Corporation revenue stream will not be affected by the choice of the systems, the projects are being evaluated through finding the PV of each set of costs.

User Account

All Pages