You own a portfolio that is 24 percent invested in Stock X, 39 percent in Stock Y, and 37 percent in Stock Z. The

expected returns on these three stocks are 10 percent, 13 percent, and 15 percent, respectively. What is the expected return on the portfolio?

Consider the following information: 

State of Economy Probability of State of Economy Rate of Return if State Occurs 

Recession .25            -.09           

Normal .45            .11          

 Boom .30            .30          

Calculate the expected return.

You own a stock portfolio invested 28 percent in Stock Q, 16 percent in Stock R, 42 percent in Stock S, and 14 percent in Stock T. The betas for these four stocks are .97, 1.03, 1.43, and 1.88, respectively. What is the portfolio beta? 

A stock has a beta of 1.18, the expected return on the market is 11.2 percent, and the risk-free rate is 4.85 percent. What must the expected return on this stock be?

A stock has an expected return of 12 percent and a beta of 1.16, and the expected return on the market is 11 percent. What must the risk-free rate be?

A stock has a beta of 1.36 and an expected return of 13.4 percent. A risk-free asset currently earns 4.6 percent. 

a.What is the expected return on a portfolio that is equally invested in the two assets? 

b.If a portfolio of the two assets has a beta of .96, what are the portfolio weights? 

c.If a portfolio of the two assets has an expected return of 12.6 percent, what is its beta? 

d.If a portfolio of the two assets has a beta of 2.56, what are the portfolio weights?

You have a portfolio with the following: 

Stock Number of Share Price Expected Return

W 900              $ 53          11%        

X 800              30          15           

Y 550             66          13        

Z 775              51          14

What is the expected return of your portfolio?           

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