Question

Please answer and walk me through all of the questions.

1. You are considering investing in a single stock that has a 50% chance of producing a 20% return. a 25% chance of producing an 8% return, and a 25% chance of producing a-12% return, what is its expected return? Expected r Consider the range of the possible returns for this stock and draw a picture of the dispersion of possible returns. 2. Expected Return on a Portfolio Stock Wtd Avg Contrib.to Portfolio Expected Dollars Percent of Return Invested 775% 725 % 8.75% 7.75% Total (w) Stock Target RiteAid Walmart8 CVS $20,000 $25,000 $25,000 25や Expected rp $100,000 100.0% 7.875% 3. An investor has a 2-stock portfolio with $25,000 invested in Stock X and $50,000 invested in Stock Y. X's beta is 1.50 and Y's beta is 0.60. What is the beta of the investor's portfolio? 4, A stock has a beta of 1.2. Assume that the risk-free rate is 4.5% and the market risk premium is 5%, what is the stock's required rate of return? 5. Stock has a required rate of return of 9%, the risk free rate is 4.5%, and the market risk premium is 3%. a. What is the stock's beta? b. If the market risk premium increased to 5%, what would happen to the stock's required rate of return? [assume the risk free rate & beta remain unchanged]

Answer 1

I can only answer 1 question at a time, so I am answering only question 1.

1. Expected r = 0.5*20% + 0.25*8% + 0.25*-12% = 9%

robabi W 5 yRetun -12 2.0

Please do rate me and mention doubts, if any, in the comments section.