Expected return on the investment portfolio

Reference no: EM13832225

Suppose you invest $158,000 and buy 2,000 shares of Microsoft (MSFT:US) at $25 per share ($50,000) and 3,000 shares of Pepsi (PEP:US) at $36 per share ($108,000). What are the portfolio weights for MSFT and PEP. If the expected returns are 12% on MSFT stock and 18% on PEP stock, which is the expected return on the investment portfolio?

Reference no: EM13832225

Questions Cloud

How much down payment will the person put down : A person wants to buy a house. The total fixed price for the house is $275,000. The person will put a down payment of 20%. The interest rate is 5.1% fixed for 30 year term. How much down payment will the person put down? What is the monthly payment?..

Capital budgeting methods are presented : Assume that two gas stations are for sale with the following cash flows; CF1 is the Cash Flow in the first year, and CF2 is the Cash Flow in the second year. This is the time line and data used in calculating the Payback Period, Net Present Value, an..

Advantages and disadvantages of closed-end country funds : Discuss the advantages and disadvantages of closed-end country funds (CECFs) relative to American depository receipts (ADRs) as a means of international diversification. Why do you think closed-end country funds often trade at a premium or discount? ..

Supplies in bulk and has recently switched vendors : 7-29. Millbridge Hospital buys its supplies in bulk and has recently switched vendors. The first purchase Millbridge madewas for 500 boxes of gauze at $3.46 a box. The purchase had payment terms of 2/15 N/30. Millbridge earns four percenton its idle ..

Expected return on the investment portfolio : Suppose you invest $158,000 and buy 2,000 shares of Microsoft (MSFT:US) at $25 per share ($50,000) and 3,000 shares of Pepsi (PEP:US) at $36 per share ($108,000). What are the portfolio weights for MSFT and PEP. If the expected returns are 12% on MSF..

Wishes to maintain a growth rate : Bulla Recording, Inc., wishes to maintain a growth rate of 15 percent per year and a debt-equity ratio of .2. Profit margin is 7.1 percent, and the ratio of total assets to sales is constant at 1.68.

Calculate the effective annual rate : Calculate the effective annual rate (EAR) for a (1) through a (4) above. Based on your findings in parts a and b, what is the general relationship between the frequency of compounding and EAR?

Why would a firm issue convertible securities : Why would a firm issue convertible securities?What are the advantages and disadvantages of issuing convertible securities?What are benefits to a firm towrd issuing standard bonds or prefered securitis?

Techniques in business decision making : Select five Operations Research techniques and describe in detail the real world application of such techniques in business decision making.

User Account

All Pages