What is expected return on your portfolio

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Reference no: EM132044225

NEED THE FORMULAS USED STEP BY STEP :

1. If you invest 35% of your holdings in a security with an expected return of 8% and the remainder in a security with an expected return of 13%, what is the expected return on your portfolio?

2. Suppose that we have identified two important systematic risk factors: the growth rate of gross domestic product, labeled GDP, and the 30-year bond interest rate, labeled BR. Whole Hog Farms, Inc. has a beta 1.1 on GDP and 0.9 on BR. Whole Hog has an expected stock return of 12%. GDP is expected to be 5.5% and BR 6%. If gross domestic product grows by 3% and the 30-year bond rate turns out to be 9%, and no unexpected news specifically concerning Whole Hog occurs, within the Arbitrage Pricing Theory framework, what is your best guess for the realized rate of return on Whole Hog stock?

Reference no: EM132044225

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