Penny Francis inherited a $100,000 portfolio of investments from her grandparents when she turned 21 years of

Question:

Penny Francis inherited a $100,000 portfolio of investments from her grandparents when she turned 21 years of age. The portfolio is comprised of the following three investments:

a. Based on the current portfolio composition and the expected rates of return, what is the expected rate of return for Pennyâ€™s portfolio?
b. If Penny wants to increase her expected portfolio rate of return, she could increase the allocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease her holdings of Treasury bills. If Penny moves all her money out of Treasury bills and splits it evenly between the two stocks, what will be her expected rate of return?
c. If Penny does move money out of Treasury bills and into the two stocks she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in theirportfolio?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...