Question

Your investment portfolio has 15,000 shares of Fairfax Paint, which has an expected return of 9.7...

Your investment portfolio has 15,000 shares of Fairfax Paint, which has an expected return of 9.7 percent and a price of 7.6 dollars per share, and 20,000 shares of Litchfield Design, which has a price of 3.4 dollars per share. If your portfolio has an expected return of 12.99 percent, then what is the expected return for Litchfield Design? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Investment in Fairfax Paint = 15,000 * 7.6 = 114,000

Investment in Litchfield Design = 20,000 * 2.6 = 68,000

Total Investment = 182,000

Expected Return = Return on Fairfax Paint * Weight of Fairfax Paint + Return on Litchfield * Weight of Litchfield

12.99% = 9.7% * 114,000 / 182,000 + Return on Litchfield * 68,000 / 182,000

12.99% = 6.07582417582% + Return on Litchfield * 0.37362637362

Return on Litchfield = (12.99% - 6.07582417582%) / 0.37362637362

Return on Litchfield = 6.9141758242% / 0.37362637362

Return on Litchfield = 18.51%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
13Your investment portfolio has 15,000 shares of Fairfax Paint, which has an expected return of 5.67...
13Your investment portfolio has 15,000 shares of Fairfax Paint, which has an expected return of 5.67 percent and a price of 7.2 dollars per share, and 20,000 shares of Litchfield Design, which has a price of 2.6 dollars per share. If your portfolio has an expected return of 8.66 percent, then what is the expected return for Litchfield Design? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as...
What is the expected return of a portfolio with two stocks that has 3,900 shares of...
What is the expected return of a portfolio with two stocks that has 3,900 shares of stock A, which has a price of 30.8 dollars per share and an expected return of 7.98 percent, and 87,800 dollars of stock B, which has a beta of 1.53? The market has an expected return of 13.54 percent, the inflation rate is 1.59 percent, and the risk-free rate is 4 percent. Answer as a rate in decimal format so that 12.34% would be...
What is the expected return of a portfolio with two stocks that has 2,800 shares of...
What is the expected return of a portfolio with two stocks that has 2,800 shares of stock A, which has a price of 20.9 dollars per share and an expected return of 5.88 percent, and 69,700 dollars of stock B, which has a beta of 1.79? The market has an expected return of 15.29 percent, the inflation rate is 1.02 percent, and the risk-free rate is 5.18 percent. Answer as a rate in decimal format so that 12.34% would be...
What is the expected return of a portfolio with two stocks that has 3,200 shares of...
What is the expected return of a portfolio with two stocks that has 3,200 shares of stock A, which has a price of 25.1 dollars per share and an expected return of 5.97 percent, and 75,300 dollars of stock B, which has a beta of 1.13? The market has an expected return of 13.51 percent, the inflation rate is 2.1 percent, and the risk-free rate is 3.01 percent. Answer as a rate in decimal format so that 12.34% would be...
What is the expected return of a portfolio with two stocks that has 2,300 shares of...
What is the expected return of a portfolio with two stocks that has 2,300 shares of stock A, which has a price of 38.2 dollars per share and an expected return of 5.21 percent, and 86,200 dollars of stock B, which has a beta of 1.63? The market has an expected return of 12.39 percent, the inflation rate is 1.81 percent, and the risk-free rate is 4.74 percent. Answer as a rate in decimal format so that 12.34% would be...
You own a portfolio that has 4,100 shares of stock A, which is priced at 17.1...
You own a portfolio that has 4,100 shares of stock A, which is priced at 17.1 dollars per share and has an expected return of 8.32 percent, and 3,700 shares of stock B, which is priced at 27.4 dollars per share and has an expected return of 12.13 percent. The risk-free return is 3.33 percent and inflation is expected to be 2.33 percent. What is the expected real return for your portfolio? Answer as a rate in decimal format so...
You own a portfolio that has 4,400 shares of stock A, which is priced at 13.8...
You own a portfolio that has 4,400 shares of stock A, which is priced at 13.8 dollars per share and has an expected return of 4.79 percent, and 3,300 shares of stock B, which is priced at 26.3 dollars per share and has an expected return of 16.86 percent. The risk-free return is 3.21 percent and inflation is expected to be 2.01 percent. What is the expected real return for your portfolio? Answer as a rate in decimal format so...
You own a portfolio that has 6,700 shares of stock A, which is priced at 18.1...
You own a portfolio that has 6,700 shares of stock A, which is priced at 18.1 dollars per share and has an expected return of 6.32 percent, and 1,800 shares of stock B, which is priced at 28.8 dollars per share and has an expected return of 16.35 percent. The risk-free return is 3.41 percent and inflation is expected to be 2.43 percent. What is the expected real return for your portfolio? Answer as a rate in decimal format so...
You own a portfolio that has 4,800 shares of stock A, which is priced at 15.4...
You own a portfolio that has 4,800 shares of stock A, which is priced at 15.4 dollars per share and has an expected return of 6.71 percent, and 3,800 shares of stock B, which is priced at 24.6 dollars per share and has an expected return of 16.07 percent. The risk-free return is 3.28 percent and inflation is expected to be 2.4 percent. What is the expected real return for your portfolio? Answer as a rate in decimal format so...
You own a portfolio that has 5,900 shares of stock A, which is priced at 15.2...
You own a portfolio that has 5,900 shares of stock A, which is priced at 15.2 dollars per share and has an expected return of 5.27 percent, and 1,000 shares of stock B, which is priced at 22.1 dollars per share and has an expected return of 14.19 percent. The risk-free return is 3.79 percent and inflation is expected to be 2.05 percent. What is the expected real return for your portfolio? Answer as a rate in decimal format so...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT