Question

Your investment portfolio has 10,000 shares of Fairfax Paint, which has an expected return of 11.46 percent and a price of 5.8 dollars per share, and 25,000 shares of Litchfield Design, which has a price of 3.2 dollars per share. If your portfolio has an expected return of 15.39 percent, then what is the expected return for Litchfield Design? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer 1

Answer:- 0.1824

Explanation:-

Portfolio's expected Return = (weight of fairfau paint x enpected Return of fair fan Paunt )+ (weight of litch field Design & expected herum uithfield deson) og Investment in fairfax Paint = 10000 Shares X $ 5.8 per share $58000 investment in litchfield Design = 25000 Sharest $ 3.2 per share $ 80,000 CS Scanned with CamScanner

Weight of fourfan Paints Investment in falrfen faink Investment in Invesment in + fairfax paints whenfield design weight of farfalle Paimk = $58000 $58000 + $80000 0.42 weight of litenfield designs Investment in Uitenhield design Investment in investment in + fairfan paints Uitenhield design 680000 $ 58000 + $80000 0.58 Expected Return of Portfolio 고 (0.42 x 11.46%) + 0.58 x bepected Rehim of Litchfield Design 15.39). 4.8132"). + 0.58 x Expected Rehurn of Utch field Design 0.58 x Expected Retum of litenfield Design 15.34). - 4.8132. 10.57682 0.50 Expected Retum of Utenfield Design 18. 2358 6207.4 Expected Return of litchfield Design OY 10.240 0.1824 CS Scanned with CamScanner