question archive You just construct a portfolio AJ where you invest $1000 in Security A and $4000 in Security J
You just construct a portfolio AJ where you invest $1000 in Security A and $4000 in Security J
Subject:BusinessPrice: Bought3
You just construct a portfolio AJ where you invest $1000 in Security A and $4000 in Security J. The portfolio has an expected return of 0.22 and a variance of 0.0016.
An investor is forming a portfolio by investing $50,000 in stock A that has a beta of 1.50, and $25,000 in stock B that has a beta of 0.90. The return on the market is equal to 6% and Treasury bonds have a yield of 4%.
Continued from previous question. Assume the predicted rate of return (expected rate of return) for Portfolio AB is 10%. Compare the required rate of return with the predicted rate of return of Portfolio AB, which of the following statements is most correct?
Select one:
a. The portfolio is not paying dividends.
b. The portfolio should be sold.
c. The portfolio is a good buy.
d. The portfolio has a smaller expected return than average stocks.
e. The portfolio is experiencing supernormal growth.
