Answer:
the expected return on the portfolio is 12.34%
Explanation:
The computation of the expected return on the portfolio is shown below:
Expected Return is
= Investment in BBB × Return+ Investment in ZI × Return
= 16.4 × 48% + 8.6 ×52%
= 7.87% + 4.47%
= 12.34%
hence, the expected return on the portfolio is 12.34%
Answer:
a) Portfolio ABC's expected return is 10.66667%.
Explanation:
Some information is missing:
Stock Expected Standard Beta
return deviation
A 10% 20% 1.0
B 10% 10% 1.0
C 12% 12% 1.4
The expected return or portfolio AB = (1/2 x 10%) + (1/2 x 10%) = 10% (it is the same as the required rate for stock A or B)
The expected return or portfolio ABC = (weight of stock A x expected return of stock A) + (weight of stock B x expected return of stock B) + (weight of stock C x expected return of stock C) = (1/3 x 10%) + (1/3 x 10%) + (1/3 x 12%) = 3.333% + 3.333% + 4% = 10.667% <u>THIS IS CORRECT</u>
Options B, C, D and E are wrong.
Answer:
Hey
Explanation:
Thanks so much.............
