What is the expected return on the portfolio

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Reference no: EM131905183

1. A portfolio is comprised of the following stocks. What is the portfolio beta?

Stock	Market Value of Shares		Beta
A	$	11,000	1.64
B	$	16,000	.92
C	$	8,000	1.13

1.26

1.07

1.19

1.34

2. You own a $55,000 portfolio that is invested in a risk-free security and Stock A. The beta of Stock A is 2.30 and the portfolio beta is .90. What is the amount of the investment in Stock A?

$21,522

$18,882

$22,342

$24,082

3. Stock A has a beta of 2.9 and an expected return of 13.9 percent. Stock B has a beta of 1.21 and an expected return of 18.20 percent. At what risk-free rate would these two stocks be correctly priced?

21.28 percent

19.10 percent

19.98 percent

20.67 percent

4. You own a portfolio that has $3,300 invested in Stock A and $4,300 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio? A percent rounded to two decimal places.

5. Consider the following information:

State of Economy	Probability of State of Economy		Portfolio Return If State Occurs
Recession		.23	-	.17
Normal		.48		.13
Boom		.29		.39

Calculate the expected return.

Reference no: EM131905183

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