Question

1. You buy 100 shares of Tidepool Co. for $36each and 205 shares of​ Madfish, Inc., for $18 each. What are the weights in your​ portfolio? The weight of Tidepool Co. stock in the portfolio is __ ​%. ​(Round to one decimal​ place.)

2. Fremont Enterprises has an expected return of 14% and Laurelhurst News has an expected return of 21%. If you put 50% of your portfolio in Laurelhurst and 50% in​ Fremont, what is the expected return of your​ portfolio? The expected return on the portfolio is __ ​%. ​(Rounded to two decimal​ places.)

3. You are considering how to invest part of your retirement savings.You have decided to put $600,000 into three​ stocks: 64% of the money in GoldFinger​ (currently $26​/share), 19% of the money in Moosehead​ (currently $90​/share), and the remainder in Venture Associates​ (currently $6​/share). Suppose GoldFinger stock goes up to $36​/share, Moosehead stock drops to $51​/share, and Venture Associates stock rises to $7 per share.

a. What is the new value of the​ portfolio?

b. What return did the portfolio​ earn?

c. If you​ don't buy or sell any shares after the price​ change, what are your new portfolio​ weights?

4. There are two ways to calculate the expected return of a​ portfolio: Either calculate the expected return using the value and dividend stream of the portfolio as a​ whole, or calculate the weighted average of the expected returns of the individual stocks that make up the portfolio. Which return is​ higher?

​(Select the best choice​ below.)

A. Neither—both calculations give the same answer.

B. The weighted average expected return of the individual stocks is higher because returns are concave.

C. Impossible to​ tell, it depends on the portfolio.

D. The weighted average expected return of the individual stocks is higher because returns are convex.

5. Stocks A and B have the following​ returns:

	Stock A	Stock B
1	0.08	0.06
2	0.05	0.01
3	0.15	0.06
4	-0.04	0.02
5	0.09	-0.02

6.
The following spreadsheet contains monthly returns for Cola Co. and Gas Co. for 2013. Using these data, estimate the average monthly return and the volatility for each stock. Month January February March April May June July August September October November Cola Co. 5.90% 5.70% 3.26% 9.60% -0.40% 9.70% 3.50% - 6.10% 3.70% 0.00% 11.90% Gas Co. -0.70% -2.30% 5.70% - 1.30% -1.90% -0.20% 5.50% -2.00% 7.60% 1.40% -0.60% The average monthly return for Cola Co. is %. (Round to two decimal places.)

Answer 1

Solution to the QUESTION-1

The market value of Tidepool Co = Number of shares x Market price per share

= 100 shares x $36 per share

= $3,600

The market value of Madfish, Inc = Number of shares x Market price per share

= 205 shares x $18 per share

= $3,690

Total market value = The market value of Tidepool Co + The market value of Madfish, Inc

= $3,600 + $3,690

= $7,290

The weight of Tidepool Co. stock in the portfolio

The weight of Tidepool Co. stock in the portfolio = [$3,600 / $7,290] x 100

= 49.4%

  

The weight of Madfish, Inc in the portfolio

The weight of Madfish, Inc in the portfolio = [$3,690 / $7,290] x 100

= 50.6%

PLEASE BE NOTED (More than 1 Question)