Question

QUESTION 17 You have are looking at an investment portfolio that will yield the following Stock Probability Beta Expected Return 0.25 1.2023 13% 0.37 0.75 18% 0.17 1.60 24% If you, as the investor, have a required rate of return of 15%, would this portfolio be a good investment? No, because the portfolio return is lower than my required rate of return No, because the portfolio return and my required rate of return are equal Yes, because the portfolio return is higher than my required rate of return There is not enough information to answer the question

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

C D Stock Expected return 13% Probability 0.25 0.37 0.17 18% 24% Portfolio return 13.99% Required return 15.00% No, because the portfolio return is lower than my required rate of return 15

Cell reference -

А в C D Stock Probability Expected return 2 3 0.13 1 2 3 0.25 0.37 0.17 0.18 0.24 Portfolio return =SUMPRODUCT(C3:C5,D3:05) Required return 0.15 No, because the portfolio return is lower than my required rate of return

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.