Problem 1: Portfolio expected return you have 10,000 to invest ion a stock portifolio. Your choices are stock x with an expected return of 14 percent and stock y with an expected return of 9 percent .If your goal is creat a portfolio with an expected return of 12.2 percent, how much money will you invest in stock x ? In Stock y ?
Problem 2: Calculating expected return based on the following information, calculate the expected rate of return:
State of Economy Probability of state of economy Rate of return if state Occurs
Recession .20 -.05
Norma .50 .12
Boom .30 .25
Problem 3: Calculate return and standard deviation based on the following information, calculate the expected return and standard deviation for the two stocks
State of Economy Probability of state of economy Rate of return if state Occus
StockA StockB
Recession .10 .06 -.20
Normal .60 .07 .13
Boom .30 .11 .33