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In order to fund her retirement, Michele requires a portfolio with an expected r

ID: 2776447 • Letter: I

Question

In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns of 0.09 and 0.10 per year, respectively, then what is the minimum expected annual return for Stock 3 that will enable Michele to achieve her investment requirement?

The beta of M Simon Inc., stock is 1.8, whereas the risk-free rate of return is 0.06. If the expected return on the market is 0.15, then what is the expected return on M Simon Inc?

London purchased a piece of real estate last year for $81,700. The real estate is now worth $101,500. If London needs to have a total return of 0.21 during the year, then what is the dollar amount of income that she needed to have to reach her objective?

Explanation / Answer

In order to fund her retirement, Michele requires a portfolio with an expected r

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