Solution-Find out the holdings of the two stocks

Find out the holdings of the two stocks

Reference no: EM132953531

You are an investment advisor. You currently own two stocks, X and Y, with the following characteristics:

Expected Return Beta

X 10% 0.8

Y 16% 1.5

The current risk-free rate is 2 percent, and the expected return on the market is 12 percent.

How would you change your holdings of the two stocks (i.e., for each, would you sell or buy more)? Show your calculations (and explain). (4 marks)

Stock A:

Stock B:

Reference no: EM132953531

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Find out the holdings of the two stocks

Reference no: EM132953531

Reference no: EM132953531

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