Solution: use Equation (16-4):
Rp = (.4)(.12) + (.6)(.20) = 16.8%.
25. Kenneth Shad has decided to invest a total of $200,000 on US and French portfolios. The expected returns are 20 percent on the French portfolio and 17 percent on an international portfolio. The international portfolio consists of 60 percent invested in the US portfolio and 40 percent invested in the French portfolio. What is the expected return on the US portfolio?
A. 11%
B. 12%
C. 13%
D. 14%
* E. 15%
Solution: use Equation (16-4):
0.17 = (0.60)(Rus) + (0.40)(0.20).
Rus = 15%.
26. Assume that the per-share prices of a common stock are $40, $50, and $60 for three days. Calculate the average price, the standard deviation, and the coefficient of variation for the stock.
* A. $50, $10, 0.20
B. $50, $10, 0.30
C. $40, $20, 0.40
D. $60, $20, 0.50
E. $40, $50, 0.20
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