10. You have $38,333 to invest in a stock portfolio, Your choices are Stock X with an expected return of 8 percent and S

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10 You Have 38 333 To Invest In A Stock Portfolio Your Choices Are Stock X With An Expected Return Of 8 Percent And S 1 (36.75 KiB) Viewed 32 times

10. You have $38,333 to invest in a stock portfolio, Your choices are Stock X with an expected return of 8 percent and Stock y with an expected return of 13 percent. Your goal is to create a portfolio with an expected return of 12.4 percent. All money must be invested. How much will you invest in stock X? A. $33.733 B. $1.200 C. $4,600 D. $8,800 E. $9,200 11. You have the following data on three stocks: Stock Standard Deviation Beta A 16% 1.4 B 1896 1.2 с 20% 1.0 If you are a strict risk minimizer, you would choose Stock if it is to be held as part of a well- diversified portfolio and Stock if it is to be held in isolation a. A:A. b. AB c. B; A d.C: A e. CB. 12. Stock A's stock has a beta of 1.40, and its required return is 15%. Stock B's beta is 0.80. If the risk- free rate is 5.10%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Do not round your intermediate calculations. a. 12.22% b. 10.44% c. 9.40% d. 11.38% e. 10.76% 13. Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns? Do not round your intermediate calculations. Economic Conditions Prob. Return Strong 31% 31% Normal 40% 11% Weak 29% -12% a. 18.62% b. 16,65% c. 19.92% d. 18.06% e. 16.94%