Question

Question 1
		YHOO	MSFT	GOOG	BOA	WMT	NFXL	MGM	Total
	Total Ret	28.576%	42.797%	100.017%	49.643%	77.830%	150.000%	80.000%
	$ Investment	100,000	200,000	300,000	50,000	500,000	500,000	200,000
	Beta	0.911	0.921	0.904	0.934	0.488	1.350	1.600
	What is the weight for Yahoo in your portfolio?
	No short-sales is allowed
Question 2
		YHOO	MSFT	GOOG	BOA	WMT	NFXL	MGM	Total
	Total Ret	28.576%	42.797%	100.017%	49.643%	77.830%	150.000%	80.000%
	$ Investment	100,000	200,000	300,000	50,000	500,000	500,000	200,000
	Beta	0.911	0.921	0.904	0.934	0.488	1.350	1.600
	What is the return for your portfolio?
Question 3
		YHOO	MSFT	GOOG	BOA	WMT	NFXL	MGM	Total
	Total Ret	28.576%	42.797%	100.017%	49.643%	77.830%	150.000%	80.000%
	$ Investment	100,000	200,000	300,000	50,000	500,000	500,000	200,000
	Beta	0.911	0.921	0.904	0.934	0.488	1.350	1.600
	What is the beta for your portfolio?
Question 4
		YHOO	MGM
	Total Ret	28.576%	80.000%
	$ Investment
	Beta	0.911	1.600
	No short-sales is allowed
	If you manage $10,000,000, how much will you invest in YHOO and in MGM to make the portfolio
		Return equal to 50%
	Report in Sakai portfolio beta.
	(Hint, using the initial value 1 and 1 investment in each stock, calculate Return and Beta and then use solver)
Question 5
		YHOO	WMT	NFXL	MGM	Total
	Total Ret	28.576%	77.830%	150.000%	80.000%
	$ Investment	1	1	1	1
	Beta	0.911	0.488	1.350	1.600
	No short-sales is allowed
	If you manage $10,000,000, find the highest return you can obtain if you want to maintain the
	systematic risk of your portfolio equal to 1.00
	(Hint, using the initial value 1 and 1 investment in each stock, calculate Return, beta (if needed) and the use solver)
Question 6
		YHOO	WMT	NFXL	MGM	Total
	Total Ret	28.576%	77.830%	150.000%	80.000%
	$ Investment	1	1	1	1
	Beta	0.911	0.488	1.350	1.600
	No short-sales is allowed
	If you manage $10,000,000, find the Lowest systematic risk you can obtain if you want to maintain the
	return of your portfolio equal to 85.00%
	(Hint, using the initial value 1 and 1 investment in each stock, calculate Return, beta (if needed) and the use solver)
Question 7
		MSFT	GOOG	BOA	WMT	Total
	Total Ret	42.797%	100.017%	49.643%	77.830%
	$ Investment	1	1	1	1
	Beta	0.921	0.904	0.934	0.488
	No short-sales is allowed
	If you manage $10,000,000, find the highest return you can obtain if you want to maintain the
	systematic risk of your portfolio equal to 0.6
	(Hint, using the initial value 1 and 1 investment in each stock, calculate Return, beta (if needed) and the use solver)
Question 8
		MSFT	GOOG	BOA	WMT	Total
	Total Ret	42.797%	100.017%	49.643%	77.830%
	$ Investment	1	1	1	1
	Beta	0.921	0.904	0.934	0.488
	No short-sales is allowed
	If you manage $10,000,000, find the Lowest systematic risk you can obtain if you want to maintain the
	return of your portfolio equal to 85.00%
	(Hint, using the initial value 1 and 1 investment in each stock, calculate Return, beta (if needed) and the use solver)

Answer 1

Ans.(1) From details provided in Q.

Weight of Particular Stock= (Amount invested in that stock/ Total Investment in a Portfolio)

So, Weight of YHOO= (100000/1850000)= 0.0541 i.e. 5.41%

Ans.(2) Return from Portfolio=(R₁*P₁+R₂*P2+R₃*P₃+........+R_n*P_n) i.e. Rate of Return * Investment in Particular Stock

Required Return=(100000*28.58%+200000*42.80%+300000*100.02%+50000*49.64%+500000*77.83%+500000*150%+200000*80%)

=(28,576.00 +85,594.00 +3,00,051.00 +24,821.50 +3,89,150.00 +7,50,000.00 +1,60,000.00 )=$1738192.50 (Ans)

Ans.(3). Beta of Portfolio.=Sum of Weighted Beta of Each Stock i.e. Beta of Particular Stock * Weight of that Stock

Weight of Stock =(Investment in Particular Stock /Total Investment in Portfolio)

Particular	YHOO	MSFT	GOOG	BOA	WMT	NFXL	MGM	Total
Weight(Investment/Total. Portfolio Value)	0.054054054	0.108108108	0.162162162	0.027027	0.27027027	0.27027027	0.108108108
Beta	0.911	0.921	0.904	0.934	0.488	1.35	1.6
Beta *Weight	0.049243243	0.099567568	0.146594595	0.0252432	0.131891892	0.364864865	0.172972973	0.990378378

So, Portfolio Beta =.99 (Ans)

Ans(4). Total amount for investment is $10,000,000,

Let Amount invested in YHOO is x. So, Amount invested in MGM is (10000000-x)

Required Rate of Return is 50%

Therefor ,Reqired Equation is

x*28.58% +(10000000-x)*80%=10000000*50%

0.2858x-.80x=5000000-8000000

0.5142x=3000000

So, x= 3000000/.5142= $5834305

Amount invested in YHOO =$5834305 Ans.

And Amount invested in MGM=(10000000-x)=(10000000-5834305)=$4165695 Ans.