John Smith has an equal amount invested in each of the following four securities: K T...

 

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John Smith has an equal amount invested in each of the following four securities: K T 0.13 0.23 Security Expected Annual Rate of Return Z 0.35 BUSI 4405-Smimou-Winter 2021 G 0.22 a. John plans to sell security Z and use the proceeds to purchase a new security that has the same expected as the current portfolio. What will happen to the expected return for the investor's new portfolio, compared to the current portfolio? Explain. Page 3 of 5 b. If John intends to sell security K instead, and use the proceeds to purchase a new security that has an expected return of 11%. Compared to the investor's initial portfolio, what will be the expected return for the investor's revised portfolio? Explain. John Smith has an equal amount invested in each of the following four securities: K T 0.13 0.23 Security Expected Annual Rate of Return Z 0.35 BUSI 4405-Smimou-Winter 2021 G 0.22 a. John plans to sell security Z and use the proceeds to purchase a new security that has the same expected as the current portfolio. What will happen to the expected return for the investor's new portfolio, compared to the current portfolio? Explain. Page 3 of 5 b. If John intends to sell security K instead, and use the proceeds to purchase a new security that has an expected return of 11%. Compared to the investor's initial portfolio, what will be the expected return for the investor's revised portfolio? Explain.

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