Finance

Basic

1.The portfolio weight of an asset is total investment in that asset divided by the total portfolio value. First, we will uncovering the portfolio value, which is:

re spirite value = 95($53) + 120($29) = $8,515

The portfolio weight for each stock is:

WeightA = 95($53)/$8,515 = .5913

WeightB = 120($29)/$8,515 = .4087

2.The judge mother of a portfolio is the sum of the weight of each asset time the judge die of each asset. The total value of the portfolio is:

heart value = $1,900 + 2,300 = $4,200

So, the expected outlet of this portfolio is:

E(Rp) = ($1,900/$4,200)(0.10) + ($2,300/$4,200)(0.15) = .1274 or 12.74%

3.The expected return of a portfolio is the sum of the weight of each asset propagation the expected return of each asset. So, the expected return of the portfolio is:

E(Rp) = .40(.11) + .35(.17) + .25(.14) = .1385 or 13.85%

4.Here we are given the expected return of the portfolio and the expected return of each asset in the portfolio and are asked to find the weight of each asset. We can use the equation for the expected return of a portfolio to solve this problem. Since the total weight of a portfolio must equal 1 (100%), the weight of buy in Y must be one minus the weight of Stock X. Mathematically speaking, this means:

E(Rp) = .129 = .16wX + .



10(1 wX)

We can now solve this equation for the weight of Stock X as:

.129 = .16wX + .10 .10wX
.029 = .06wX
wX = 0.4833

So, the dollar aggregate invested in Stock X is the weight of Stock X times the total portfolio value, or:

investment funds in X = 0.4833($10,000) = $4,833.33

And the dollar amount invested in Stock Y is:

Investment in Y = (1 0.4833)($10,000) = $5,166.67

5.The expected return of an asset is the sum of the probability of each return occurring times the probability of that return occurring. So, the expected return of the asset is:

E(R) = .2(.09) + .5(.11) + .3(.23) =...If you want to get a full essay, order it on our website: Orderessay



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