HomeworkLib
Question

An investor constructs a portfolio of Security X and Security Y with weights of 61% and 39%, respectively. Assume that Securi

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Portfolio X is 61% . (0.61)

Portfolio Y is 39% . (0.39)

Rate of Return for Y is 13% (0.13)

Therefore Rate of Return for X = x

X . Y

0.61 = . 0.39

x . = 0.13

Rate of return for x= 0.02 (By cross multiplication)

Therefore Total return of Portfolio is 0.13+0.02= 0.15 (0.15*100)

15% (Option A is closest to 15% ie 16.90)

0 0
Add a comment
Know the answer?
Add Answer to:
An investor constructs a portfolio of Security X and Security Y with weights of 61% and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose that an investor holds a portfolio consisting of 10 shares of firm X and 10...

    Suppose that an investor holds a portfolio consisting of 10 shares of firm X and 10 shares of firm Y. Securities X and Y are traded at 10$ each and their prices are negatively correlated with the correlation coefficient being equal to -0.5. The annual expected return equals rx = 10% and ry = 5%, while the standard deviation of the returns equals to σx = 20% and σy = 15%, respectively. 1. Assuming that transaction costs are zero, how...

  • Security X has an expected return of 15% and a standard deviation of 35%, and is...

    Security X has an expected return of 15% and a standard deviation of 35%, and is to be continued in a portfolio with Security Y. The correlation between both assets is 0.75. An investor plans to invest $3000 in Security X and $7000 in Security Y. (a) What will be the expected return om the portfolio? (b) If the investor has a risk tolerance of only 25% or less, will this be achieved? Show with calculations accurate to two decimal...

  • you are considering investing in two securities. Security 1 has a expected return of 12% and...

    you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of return of 10%. Security 2 has an expected return of 9%and a standard deviation of returns of 8%. The correlation coefficient of returns for the two securities is 0.3. What would the weights be for each of the two securities in the minimum variance portfolio? W1= W2= Given the weights computed in (a), compute the expected return and standard deviation...

  • LO11. x LO1 2. Determining Portfolio Weights What are the portfolio weights for a portfolio that...

    LO11. x LO1 2. Determining Portfolio Weights What are the portfolio weights for a portfolio that has 185 shares of Stock A that sell for $64 per share and 115 shares of Stock B that sell for $49 per share? Portfolio Expected Return You own a portfolio that has $3,140 invested in Stock A and $4,300 invested in Stock B. If the expected returns on these stocks are 9 percent and 14 percent, respectively, what is the expected return on...

  • efficient fronteir and portfolio choice

    Problem 5 (Efficient frontier and portfolio choice)Consider the following expected returns, volatilities, and correlations:StockExpected returnStandard deviationCorrelation with Duke EnergyCorrelation with MicrosoftCorrelation with Wal-MartDuke Energy14%6%1-10Microsoft44%24%-110.7Wal-Mart23%14%00.71(a) Consider a portfolio consisting of only Duke Energy and Microsoft. The percentage of your investment (portfolio weights) that you would place in Microsoftstock to achieve a risk-free investment should be closest to:(1) 15%(2) 4%(3) 23%(4) 10%(b) The expected return of a portfolio that is equally-invested in Duke Energy and Microsoft is closest to:(1) 28%(2) 29%(3) 24%(4)...

  • you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of ret...

    you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of return of 10%. Security 2 has an expected return of 9%and a standard deviation of returns of 8%. The correlation coefficient of returns for the two securities is 0.3. What would the weights be for each of the two securities in the minimum variance portfolio? W1= W2= Given the weights computed in (a), compute the expected return and standard deviation...

  • You are considering investing in two securities, X and Y. The following data are available for...

    You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.09 0.02 Standard deviation of returns 0.04 0.06 Beta 1.00 0.85 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.45, compute the following: The expected return from the...

  • You are considering investing in two securities, X and Y. The following data are available for...

    You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.03 0.05 Standard deviation of returns 0.02 0.07 Beta 1.40 0.70 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.5, compute the following: The expected return from the...

  • You are considering investing $1,800 in a complete portfolio. The complete portfolio is composed of Treasury...

    You are considering investing $1,800 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P.constructed with two risky securities, X and Y. The optimal weights of X and Y in Pare 60% and 40% respectively. X has an expected rate of return of 13%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 7%, you should invest...

  • A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y....

    A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance between Stock X and Stock Y is 0.10. The standard deviation of Stock X is 0.50, and the standard deviation of Stock Y is 0.50. Which of the following comes closest to the correlation coefficient between Stock X and Stock Y? O a. 0.40 b. 0.60 c. 0.00 O d. 0.50 o e. 1.00

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT