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FIN4131 Exercise on Risk and Return QnA
FIN4131 Exercise on Risk and Return QnA
FIN4131 Exercise on Risk and Return QnA
ANSWER:
Expected return = (0.14 × 0.18) + (0.75 × 0.11) + (0.11 × -0.05) = 10.22 percent
2. Beasley Enterprises stock has an expected return of 11.5 percent. Given the information
below, what is the expected return if the economy is in a recession?
4. Given the following information, what is the standard deviation of the returns on this stock?
5. You own a portfolio consisting of the securities listed below. The expected return for each
security is as shown. What is the expected return on the portfolio?
ValueW = 300 × $11 = $3,300
ValueX = 450 × $19 = $8,550
ValueY = 100 × $48 = $4,800
ValueZ = 575 × $33 = $18,975
ValuePort = $3,300 + $8,550 + $4,800 + $18,975 = $35,625
Expected return = [($3,300/$35,625) × 0.089] + [($8,550/$35,625) × 0.116] +
[($4,800/$35,625) × 0.284] + [($18,975/$35,625) × 0.127] = 14.20 percent
6. Given the following information, what is the expected return on a portfolio that is invested 35
percent in Stock A, 45 percent in Stock B, and the balance in Stock C?
8.
What is the beta of the following portfolio?
C. 1.04
10.