Question 19 Stock A has a beta of 0.5. The risk-free asset has a beta of zero. T

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Question 19

Stock A has a beta of 0.5. The risk-free asset has a beta of zero. The portfolio of these two securities has a beta of 0.8, what is the weight of Stock A in the portfolio?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

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Question 20

Suppose you have a portfolio where you have invested $15515 in Stock A and Stock B. Stock A has an expected return of 19.6% and Stock B has an expected return of 6.3%. If your goal is to create a portfolio with an expected return of 10.1%, what is your dollar investment in Stock B?

Note: Enter your answer rounded off to two decimal points. Do not enter $ in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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Question 21

Given the data below, compute the standard deviation for stock A. Enter your answer in percentages rounded off to two decimal points.Do not enter % in the answer box.

Event Probability Returns Pessimistic 25% 13% Most Likely 50% 15% Optimistic 25% 17%

Explanation / Answer

19.

The portfolio of these two securities has a beta=0.8

weight of stock A*beta of stock A+weight of risk free asset*beta of risk free asset=0.8

weight of stock A*0.5+0*0=0.8

weight of stock A=0.8/0.5=160.00%

the above is answer..

we do only one question based on Chegg rule

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