3. You are considering how to invest part of your retirement savings.You have decided to...
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3. You are considering how to invest part of your retirement savings.You have decided to put $100,000 into three stocks: 68% of the money in GoldFinger (currently $24/share), 18% of the money in Moosehead (currently $97/share), and the remainder in Venture Associates (currently$2/share). Suppose GoldFinger stock goes up to $42/share, Moosehead stock drops to $63/share, and Venture Associates stock rises to $16 per share. a. What is the new value of the portfolio? b. What return did the portfolio earn? c. If you don't buy or sell any shares after the price change, what are your new portfolio weights?
4.) You have $55,000. You put 15% of your money in a stock with an expected return of 13%, $38,000 in a stock with an expected return of 15%, and the rest in a stock with an expected return of 23%. What is the expected return of your portfolio?
12.) The risk-free rate is 4.9% and you believe that the S&P 500's excess return will be 8.5% over the next year. If you invest in a stock with a beta of 1.4 (and a standard deviation of 30%), what is your best guess as to its expected excess return over the next year?
13.) The risk-free rate is 4.9% and you believe that the S&P 500's excess return will be 8.5% over the next year. If you invest in a stock with a beta of 1.4 (and a standard deviation of 30%), what is your best guess as to its expected excess return over the next year?
16.) Suppose Autodesk stock has a beta of 2.30, whereas Costco stock has a beta of 0.68. If the risk-free interest rate is 6.5% and the expected return of the market portfolio is 14.0%, what is the expected return of a portfolio that consists of 70 % Autodesk stock and 30 % Costco stock, according to the CAPM?
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