1
You own a portfolio that has $1,700
invested in Stock A and $1,700 invested in Stock B. If the expected returns on
these stocks are 11 percent and 14 percent, respectively, the expected return
on the portfolio ispercent.(Do not
include the percent sign (%). Round your answer to 2 decimal place. (e.g.,
32.16))
2
Based
on the following information, the expected return is percent.(Do not include the percent sign (%). Round your
answer to 2 decimal places. (e.g., 32.16))
State of
Economy
Probability of State
of Economy
Portfolio Return if
State Occurs
Recession
0.3
0.12
Boom
0.7
0.3
3
Based
on the following information, the expected return and standard deviation for
Stock A are percent
and percent,
respectively. The expected return and standard deviation for Stock B
are percent
and percent,
respectively.(Do not include the
percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))
Rate of Return if State Occurs
State of
Economy
Probability of State
of Economy
Stock A
Stock B
Recession
0.2
0.03
-0.23
Normal
0.6
0.08
0.14
Boom
0.2
0.14
0.33
4
Consider the
following information:
Rate of Return if State Occurs
State of
Economy
Probability of
State of Economy
Stock A
Stock B
Stock C
Boom
0.7
0.25
0.33
0.23
Bust
0.3
0.05
0.13
0.03
Required:
(a)
The
expected return on an equally weighted portfolio of these three stocks
is percent.(Do not include the percent sign (%). Round your
answer to 2 decimal places. (e.g., 32.16))
(b)
The
variance of a portfolio invested 20 percent each in A and B, and 60 percent
in C is.(Round your answer to 6 decimal places. (e.g.,
32.161616)
5
A stock has an expected
return of 17 percent, the risk-free rate is 6.8 percent, and the market risk
premium is 6 percent. The beta of this stock must be.(Round your answer to 2 decimal places. (e.g.,
32.16))
6
You want to create a portfolio equally as risky as the market,
and you have $1,500,000 to invest. Consider the following information:
Asset
Investment
Beta
Stock A
$300,000
0.80
Stock B
$375,000
1.25
Stock C
1.50
Risk-free
asset
Required:
(a)
What is the
investment in Stock C?(Do not round your intermediate calculations.)
(Click to select)
$329,167
$548,600
$506,400
$501,125
$527,500
(b)
What is the
investment in risk-free asset?(Do not round your intermediate calculations.)
(Click to select)
$309,400
$297,500
$285,600
$282,625
$495,833
7
You
own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R,
10 percent in Stock S, and 35 percent in Stock T. The betas for these four
stocks are 0.95, 0.93, 1, and 1.51, respectively. What is the portfolio beta?
1.17
1.15
1.09
1.12
1.2
8
The
return on a portfolio that is equally invested in large-company stocks and
long-term government bonds is percent.
The return on a portfolio that is equally invested in small-company stocks
and Treasury bills is percent.(Do not include the percent signs (%). Round
your answers to 2 decimal places, (e.g., 32.16.))
Investment
Average Return
Large-company
stocks
12.3%
Small-company
stocks
17.1
Long-term
corporate bonds
6.2
Long-term
government bonds
5.8
U.S.
Treasury bills
3.8
Inflation
3.1
1You own a portfolio that has $1,700
invested in Stock A and $1,700 invested in Stock B. If the expected returns on
these stocks are 11 percent and 14 percent, respectively, the expected return
on the portfolio ispercent.(Do not
include the percent sign (%). Round your answer to 2 decimal place. (e.g.,
32.16))2Based
on the following information, the expected return is percent.(Do not include the percent sign (%). Round your
answer to 2 decimal places. (e.g., 32.16))State of
EconomyProbability of State
of EconomyPortfolio Return if
State Occurs Recession0.3
0.12
Boom0.7
0.3
3Based
on the following information, the expected return and standard deviation for
Stock A are percent
and percent,
respectively. The expected return and standard deviation for Stock B
are percent
and percent,
respectively.(Do not include the
percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16)) Rate of Return if State Occurs State of
EconomyProbability of State
of EconomyStock AStock B Recession0.2
0.03
-0.23
Normal0.6
0.08
0.14
Boom0.2
0.14
0.33
4Consider the
following information: Rate of Return if State OccursState of
EconomyProbability of
State of EconomyStock AStock BStock C Boom0.7
0.25 0.33 0.23 Bust0.3
0.05 0.13 0.03 Required:(a)The
expected return on an equally weighted portfolio of these three stocks
is percent.(Do not include the percent sign (%). Round your
answer to 2 decimal places. (e.g., 32.16))(b)The
variance of a portfolio invested 20 percent each in A and B, and 60 percent
in C is.(Round your answer to 6 decimal places. (e.g.,
32.161616)5A stock has an expected
return of 17 percent, the risk-free rate is 6.8 percent, and the market risk
premium is 6 percent. The beta of this stock must be.(Round your answer to 2 decimal places. (e.g.,
32.16))6You want to create a portfolio equally as risky as the market,
and you have $1,500,000 to invest. Consider the following information: AssetInvestmentBeta Stock A$300,0000.80 Stock B$375,0001.25 Stock C 1.50 Risk-free
asset Required:(a)What is the
investment in Stock C?(Do not round your intermediate calculations.)
(Click to select)
$329,167
$548,600
$506,400
$501,125
$527,500
(b)What is the
investment in risk-free asset?(Do not round your intermediate calculations.)
(Click to select)
$309,400
$297,500
$285,600
$282,625
$495,833
7You
own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R,
10 percent in Stock S, and 35 percent in Stock T. The betas for these four
stocks are 0.95, 0.93, 1, and 1.51, respectively. What is the portfolio beta?1.171.151.091.121.28The
return on a portfolio that is equally invested in large-company stocks and
long-term government bonds is percent.
The return on a portfolio that is equally invested in small-company stocks
and Treasury bills is percent.(Do not include the percent signs (%). Round
your answers to 2 decimal places, (e.g., 32.16.)) InvestmentAverage Return Large-company
stocks12.3%
Small-company
stocks17.1
Long-term
corporate bonds6.2
Long-term
government bonds5.8
U.S.
Treasury bills3.8
Inflation3.1
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