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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
Consider a world that only consists of the three stocks shown in the following table:
Â
|
 Stock |
Total Number of SharesOutstanding |
 Current Price perShare |
 ExpectedReturn |
|
First Bank |
100 Million |
$100 |
18% |
|
Fast Mover |
50 Million |
$120 |
12% |
|
Funny Bone |
200 Million |
$30 |
15% |
Â
Calculate the total value of all shares outstanding currently.
What fraction of the total value outstanding does each stock make up?
You hold the market portfolio, that is, you have picked portfolio weights equal to the answer to part b (that is, each stock’s weight is equal to its contribution to the fraction of the total value of all stocks). What is the expected return of your portfolio?
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