Invest in a stock portfolio

Reference no: EM13156913

1. You have $26,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 11.0 percent. If your goal is to create a portfolio with an expected return of 13.68 percent, how much money will you invest in Stock X and Stock Y?

Amount invested
Stock X mce_markernbsp;
Stock Y mce_markernbsp;
2. Consider the following information:

Rate of Return If State Occurs
State of Probability of
Economy State of Economy Stock A Stock B
Recession 0.21 0.06 - 0.21
Normal 0.58 0.09 0.08
Boom 0.21 0.14 0.25

Calculate the standard deviation for the two stocks. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Standard deviation
Stock A %
Stock B %
3.
Consider the following information:

Rate of Return if State Occurs
State of Probability of
Economy State of Economy Stock A Stock B Stock C
Boom 0.20 0.31 0.41 0.32
Good 0.50 0.18 0.12 0.11
Poor 0.25 - 0.04 - 0.07 - 0.05
Bust 0.05 - 0.15 - 0.27 - 0.08

a.
Your portfolio is invested 28 percent each in A and C, and 44 percent in B. What is the expected return of the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))

Expected return %

b-1 What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161))

Variance

b-2
What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Standard deviation %

Reference no: EM13156913

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