Question: Ralph Saunderson s portfolio includes both stocks and a corporate bond

Ralph Saunderson’s portfolio includes both stocks and a corporate bond. The total amount of funds that Ralph has invested is $50,000, with $40,000 of this amount invested in the stocks. The names of the stocks and their most recent one-year returns are given in the following table:
Stock Return
Abbott, Inc. ......... 20.1%
Randicorp ......... 12.5
Salvidore Co. ......... 2.4
Of the $40,000 invested in the stocks, 50 percent is invested in Randicorp and the rest is divided equally between Abbott, Inc., and Salvidore Company. The most recent one-year return on the bond was 6 percent.
a. How much does Ralph have invested in each of the stocks?
b. If Ralph’s portfolio included only the stocks, what would be his most recent one-year return?
c. What is the most recent one-year return earned by Ralph on the entire portfolio?

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  • CreatedNovember 24, 2014
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