Question

In: Finance

The following are the expected returns on a portfolio of investments. What is the expected rate of return on the portfolio?

The following are the expected returns on a portfolio of investments. What is the expected rate of return on the portfolio?

 

Investment # of shares Price per share Expected return

A. 2000 $20 10%

B. 3000 $10 15%

C. 1000 $15 8%

Solutions

Expert Solution

Investment #of shares (A) Price per share (B) Expected return   A X B    
A. 2000 $20 10% $40,000 (2000*2=40,000)
B. 3000 $10 15% $30,000 (3000*10=30,000)
C. 1000 $15 8% $15,000 (1000*15=15,000)
Investment Value Return (A) Weight (B) A X B   Weights Calculation Return  
A $40,000 10% 47% 4.71%   (40,000/85,000=47%) (47%*10%=4.71%)
B $30,000 15% 35% 5.29%   (30,000/85,000=35%) (35%*15%=5.29%)
C $15,000 8% 18% 1.41%   (15,000/85,000=18%) (18%*8%=1.41%)
Total $85,000 Expected PortfolioReturn 11.41%          
            Expected Portforlio Return = (4.71%+5.29%+4.41%)=11.41%

Expected Portforlio Return = (4.71%+5.29%+4.41%)=11.41%

 

Junaid answered 1 year ago
Next > < Previous

Related Solutions

1.how to Calculate the expected rate of return and volatility for a portfolio of investments and...
1.how to Calculate the expected rate of return and volatility for a portfolio of investments and describe how diversification affects the returns to a portfolio of investments ? 2.Understand the concept of systematic risk for an individual investment and calculate portfolio systematic risk (beta). 3.Estimate an investor’s required rate of return using the Capital Asset Pricing Model.
What is the expected return on a portfolio? How can the expected return on a portfolio...
What is the expected return on a portfolio? How can the expected return on a portfolio be manipulated to minimize the risk on that portfolio? Justify your answer
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 2.3. Xyrong pays out 45% of its earnings in dividends, and the latest earnings announced were $9.00 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever. a. What is the...
The risk-free rate of return is 10.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 10.0%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corporation has a beta coefficient of 1.6. Xyrong pays out 30% of its earnings in dividends, and the latest earnings announced were $15 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever. a. What is the...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 1.3. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $8.00 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 15% per year on all reinvested earnings forever. a. What is the...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 2.0. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $20 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever. a. What is the...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 2.0 resulting in a required rate of return of 19.00%. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $20 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year...
Astrid has the following two investments in her portfolio: Investment Expected Return    Standard Deviation   ...
Astrid has the following two investments in her portfolio: Investment Expected Return    Standard Deviation    Beta % Weighting M 12% 3.1% 1.40 55% N 19% 3.9 0.85 45 Which investment is riskier by itself and in a portfolio sense? What is the expected return of the portfolio? With a correlation coefficient of +0.30, what is the standard deviation of the portfolio? What is the beta of the portfolio? What is the significance of the results in parts a through...
The stock has the following returns and probabilities of those returns. What is the expected return...
The stock has the following returns and probabilities of those returns. What is the expected return and risk of the stock using the data? Use your knowledge (weighted average of returns to calculate expected return and standard deviation of returns to calculate risk). return probability 6% 70% 15% 30% Also, How do you calculate portfolio beta? I have this problem and have not been able to calculate the correct answer. Using the table below what is the beta of the...
What is the return on a portfolio composed of the following 5 investments in equal amounts:...
What is the return on a portfolio composed of the following 5 investments in equal amounts: Investment A increased 5%, Investment B increased 12%, Investment C decreased 3%, Investment D increased 0.5% and investment E increased 7%.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT