Question

5. Module Three Homework Template - Excel File Home Insert Page Layout Formulas Data Review View Tell me what you want to do Arial BIU. - 10 . A* .. = = EWrap Text General X Cut E Copy Format Painter Clipboard D D Paste * Merge & Center - $ % ) * .99 Conditional Format as Formatting - Table - Styles Cell Styles Font Alignment Number AI x x P7-11 D F G c LA BIO 1 P7-111 point H I J K L M N No credit will be given if work is not shown. Highlight or bold your answers. 3 You analyze the prospects of several companies and come to the following conclusions about the expected return on each: Stock Expected Return Starbucks 18% Sears Microsoft 1694 Limited Brands 9 You decide to invest $4,000 in Starbucks. $6,000 in Sears, S12,000 in Microsoft, and $3.000 in Limited Brands. What is the expected return on your 10 portfolio? (Show your work. Label %. Two decimal places required.)

Answer 1

Total portfolio value = $4,000 + $6,000 + $12,000 + $3,000 = $25,000

Portfolio expected return = [($4,000/$25,000) × 18%] + [($6,000/$25,000) × 8%] + [($12,000/$25,000) × 16%] + [($3,000/$25,000) × 12%] = 13.92%