Question: I need the formula, and the solution step by step. A portfolio has an expected return of 13.4 percent. This portfolio contains two stocks and

I need the formula, and the solution step by step.

A portfolio has an expected return of 13.4 percent. This portfolio contains two stocks and one risk-free security. The expected return on Stock X is 12.2 percent and on Stock Y it is 19.3 percent. The risk-free rate is 4.1 percent. The portfolio value is $48,000 of which $10,000 is the risk-free security. How much is invested in Stock X? A. $21,548.19 B. $19,514.14 C. $18,478.87 D. $22,200.14 E. $16,904.72

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Accounting HW 1: Due date Sep 9, 2019 Simplex Corporation provides the following information at the end of the year. Salaries payable to workers at the end of the year Advertising expense for the...

Question 4 Which one of the following will Which one of the following will increase the price-earnings ratio, all else constant?all else constant? (I.) a decrease in the number of shares outstanding...

16. A 20-year bond with annual coupon payments is currently selling at $1,040. If the coupon rate is 6%, what is the current yield? Select one: a. 5.77% b. $60 c. 4% d. 6% 17. Decreases in inventory...

1. Assume stocks A and B have had identical stock prices every day for the past three years. Stock A pays a dividend but Stock B does not. Which one of these statements applies to these stocks for...

Calculate the following Question 1. The following information was extracted from the books of Lima traders for the year ended 31st dec 2009. a) Closing capital as at 31st /12/2009 -: sh 4000,000. b)...

fin6. its complete Consider a two-date economy where there are three states of the world at date 1. Consumption per capita at date 1 will be $5, $10, or $15. A security that pays one unit of...

Compute the efficient frontier when short sales are not allowed. Use the Solver tool in Excel (on the Datatab in the analysis section. To set the Solver parameters Set the objective to be the cell...

Your manager was so impressed with your work analyzing the return and standard deviations of the 12 stocks from Chapter 10 that he would like you to continue your analysis. Specifically, he wants you...

You own a portfolio that has $2,310 invested in Stock A and $3,840 invested in Stock B. If the expected returns on these stocks are 9 percent and 10 percent, respectively, what is the expected return...

Rossdale Co. stock currently sells for $73.31 per share and has a beta of 1.24. The market risk premium is 6.90 percent and the risk-free rate is 2.82 percent annually. The company just paid a...

Josh Thomas, Jack Wiley, and Will Regis are three close friends who have been offered the opportunity to invest $100,000 each and to become 10 percent shareholders each in a closely held corporation...

Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of $278,000. Today, that lot has a market value of $264,000. At the time of purchase, the company spent $6,000 to level the...

2 The following directors of Julius Ltd have been disqualified for two years following their misconduct while directors of the company Jane, Harry, Mary and James. Jane is now working as a secretary...

Assume that have recently been appointed as a member of the Financial Risk Management team of your organisation. For the purpose of this research paper, select a company of your choice, an...

Define technical words and explain how you would make decisions about their use in your business messages. (Objective 1)

Give three examples of vague or abstract words and how they could be made more specific. (Objective 1)

Define the KISS principle of business communication and discuss the advantages of its use. (Objective 1)