Use the following data: Market risk premium = 8.5% Risk-free rate = 3% Beta of XYZ stock
Question:
Market risk premium = 8.5%
Risk-free rate = 3%
Beta of XYZ stock = 1.4
Beta of PDQ stock = 2.0
Investment in XYZ stock = $70,000
Investment in PDQ stock = $130,000
You have no assets other than your investments in XYZ and PDQ stock.
What is the expected return of your portfolio? Show all work.
Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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