CourseLover

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    Devry University
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    NatSteel Holdings Pte Ltd
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Category > Business & Finance Posted 15 Dec 2017 My Price 10.00

Calculate the expected return of portfolio

I have another one I need assistance in solving


you own a portfolio consisting of the following stocks. the risk free rate is 9 percent. Also, the expected return on the market portfolio is 14 percent. Stock Percentage of Portfolio Beta Expected Return 1 30% 1.1 17% 2 10% 0.82 13% 3 5% 1.22 21% 4 20% 0.55 10% 5 35% 1.65 26% a. Calculate the expected return of your portfolio. (Hint: The expected return of a portfolio equals the weighted average of the individual stock's expected return, where the weights are the percentage invested in each stock) b. Calculate the portfolio beta. c. Given the preceding information, plot the security market line on paper. Plot the stocks from your portfolio on your graph. d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusions in part d to be less than certain? a. The expected return of your portfolio is ____%. ( Round to two decimal places.) b. The beta of your portfolio is ____. (Round to two decimals) c. Assume the risk free rate is 9 percfent and the expected return on the market portfolio is 14 percent. Given that the stocks from your portfolio have been plotted on the graph below, draw the security market line on the graph. d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? Stock 1 is a Loser or Winner Stock 2 is Loser or Winner Stock 3 is a loser or winner Stock 4 is a loser of winner Stock 5 is a loser of winner e. Why should you consider your conclusions in part d to be less than certain? A. The conclusions are less than certain because it is possible to draw an incorrect security market line by using bab estimated in the data. B. the conclusions are less than certain because the capital asset pricing model is based on some unrealistic assumptions. C. The conclusions are less than certain because the market data is not possible to obtain. D. the conclusions are less than certain because the investor's preference toward risk is hard to estimate. Security Market line 30 5 25 3 1 20 2 15 4 10 5 0 0 0.5 1 1.5 2 Beta E x p e c t e d r e t u r n ( % )
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CourseLover
(12)
Status NEW Posted 15 Dec 2017 11:12 AM My Price 10.00

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