Question

Create an Excel spreadsheet to organize your answers to the following problem

A portfolio has been constructed from the following securities:

Security	Expected Return	Amount Invested
A	6%	$30,000
B	14%	$15,000
C	12%	$55,000

A. What is the expected rate of return from this portfolio?

B. If Security B is sold, what will be the expected rate of return on the remaining two-stock portfolio?

C. Without respect to item B above, if the investor buys $50,000 of Security D, with an expected return of 10%, and adds it to the original portfolio, what will be the expected rate of return of the resulting four-stock portfolio?

D. Without respect to item B or C above, if the investor sells $20,000 of Security C, what will be the expected rate of return of the remaining three-stock portfolio?

Answer 1