Problem 8-06 You expect to invest your funds equally in four stocks with the following expected...
Problem 8-06 You expect to invest your funds equally in four stocks with the following expected returns: Stock Expected Return A 15 % B 13 C 10 D 5 At the end of the year, each stock had the following realized returns: Stock Realized Return A -2 % B 29 C 2 D -2 Compare the portfolio’s expected and realized returns. Round your answers to two decimal places. Expected return: %? Realized return: %?
Homework Answers
Expected/realized return from portfolio is the weighted average return
Therefore,
Expected return from portfolio = (15+13+10+5)/4 =10.75%
Realized return from portfolio = (-2+29+2-2)/4 = 6.75%
Add Answer to:
Problem 8-06 You expect to invest your funds equally in four
stocks with the following expected...
Problem 8-02 You are considering investing in three stocks with the following expected returns: Stock A...
Problem 8-02 You are considering investing in three stocks with the following expected returns: Stock A 7 % Stock B 12 Stock C 19 a. What is the expected return on the portfolio if an equal amount is invested in each stock? Round your answer to two decimal places. b. What would be the expected return if 54 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C? Round...
Problem 8-02 You are considering investing in three stocks with the following expected returns: Stock A 6 % Stock B 15...
Problem 8-02 You are considering investing in three stocks with the following expected returns: Stock A 6 % Stock B 15 Stock C What is the expected return on the portfolio if an equal amount is invested in each stock? Round your answer to two decimal places. % What would be the expected return if 50 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C? Round your answer...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 14 8.78 % 14 % 0.8 10.83 1.3 11.65 1.5 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is...
You are considering investing in three stocks with the following expected returns: Stock A: 7% Stock...
You are considering investing in three stocks with the following expected returns: Stock A: 7% Stock B: 12% Stock C: 20%. What is the expected return on the portfolio if an equal amount is invested in each stock? What would be the expected return if 50 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C?
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C....
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) 1.3 Stock Expected Return Standard Deviation Beta 9.28 % 14 % 0.8 11.33 14 12.15 14 1.5 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. T...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 8.30 % 16 % 0.7 B 9.90 16 1.1 C 12.30 16 1.7 Fund P has one-third of its funds invested in each of the three stocks....
You meet a friend who is planning to invest in stocks. They say that “The expected...
You meet a friend who is planning to invest in stocks. They say that “The expected return on Microsoft is 7% and the volatility of returns is 24. Whereas for Wal-Mart the expected return is just 6% and the volatility of returns is 30. So, it never makes sense to own Wal-Mart stock as Microsoft stock strictly dominates Wal-Mart stock.” Is your friend correct? Explain why.
If you invest 30% of your funds in AT&T stock with an expected rate of return...
If you invest 30% of your funds in AT&T stock with an expected rate of return of 10% and the remainder in GM stock with an expected rate of return of 15%, the expected return on your portfolio is
Problem 8-03 A portfolio consists of assets with the following expected returns: Technology stocks 20 %...
Problem 8-03 A portfolio consists of assets with the following expected returns: Technology stocks 20 % Pharmaceutical stocks 15 Utility stocks 11 Savings account 2 What is the expected return on the portfolio if the investor spends an equal amount on each asset? Round your answer to two decimal places. % What is the expected return on the portfolio if the investor puts 52 percent of available funds in technology stocks, 14 percent in pharmaceutical stocks, 16 percent in utility...
Problem 8-6 Expected returns Stocks A and B have the following probability distributions of expected future...
Problem 8-6 Expected returns Stocks A and B have the following probability distributions of expected future returns: Probability A -10 % 0.1 -29% 0.3 0 0.3 13 18 0.2 22 26 0.1 29 36 a. Calculate the expected rate of return, rB, for Stock B (FA 10.80 %. ) Do not round intermediate calculations. Round your answer to two decimal places. 17.84 %. ) Do not round intermediate calculations. Round b. Calculate the standard deviation of expected returns, aA, for...
Problem 8-02 You are considering investing in three stocks with the following expected returns: Stock A 6 % Stock B 15 Stock C What is the expected return on the portfolio if an equal amount is invested in each stock? Round your answer to two decimal places. % What would be the expected return if 50 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C? Round your answer...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 14 8.78 % 14 % 0.8 10.83 1.3 11.65 1.5 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is...
Problem 8-13 CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) 1.3 Stock Expected Return Standard Deviation Beta 9.28 % 14 % 0.8 11.33 14 12.15 14 1.5 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate...
Problem 8-6 Expected returns Stocks A and B have the following probability distributions of expected future returns: Probability A -10 % 0.1 -29% 0.3 0 0.3 13 18 0.2 22 26 0.1 29 36 a. Calculate the expected rate of return, rB, for Stock B (FA 10.80 %. ) Do not round intermediate calculations. Round your answer to two decimal places. 17.84 %. ) Do not round intermediate calculations. Round b. Calculate the standard deviation of expected returns, aA, for...
Most questions answered within 3 hours.
-
An infinite sheet of charge that has a surface charge density of
39 nC/m2 lies in...
asked 1 hour ago -
After watching the lectures I am still having a hard time
understanding these equations.
1. The...
asked 2 hours ago -
Testing:
H0:μ=56.9
H1:μ<56.9
Your sample consists of 23 subjects, with a mean of 56.3 and
standard...
asked 2 hours ago -
straight wire, labeled as Wire A, lies horizontally on a
tabletop and is oriented to run...
asked 2 hours ago -
For a Chi-Squared Goodness of Fit Test about a uniform
distribution, complete the table.
Round to...
asked 2 hours ago -
Milk of magnesia is only slightly soluble in water. Kc for the
reaction Mg(OHs)(s)>Mg2+(a) + 2OH-1(aq)...
asked 2 hours ago -
Excel's HYPGEOM.DIST function can be used to compute _____.
a. both hypergeometric probabilities and cumulative
hypergeometric...
asked 3 hours ago -
The rocket used for the human lunar missions was the Saturn V
rocket. At liftoff the...
asked 2 hours ago -
1. The East Street Bagel Shop has a weekly demand for 3,500
bagels, which they make...
asked 2 hours ago -
paraphrasing each paragraph
“Where two or more persons knowingly act together unlawfully,
the act of each...
asked 3 hours ago -
The lateral line system in fish is contained which of the
following?
chemoreceptors
photoreceptors
mechanoreceptors
odor...
asked 3 hours ago -
Find the y-intercept of y =-5 x. The y-intercept of y equals
negative 5 x is______...
asked 3 hours ago