Question

The following table shows fictitious share prices and yields of some extinct US companies:

Symbol	Company	Price ($)	Yield (%)
TWA	Trans World Airlines	27.23	3.62
PNAA	Pan American World Airways	38.30	0.12
EAL	Eastern Airline Inc	27.00	0.58
CPQ	Compaq Computers	6.92	0.35
GEFO	General Foods Corp	67.33	4
STOO	Standard Oil	72.58	0.14
RCA	Radio Corporation of America	60.47	0.61
STB	Studebaker Motor Company	27.18	2.17

You decide to make a small portfolio consisting of four of these companies selected at random.

a. How many possible portfolios of four stocks are possible in which all have yields of at least 0.3%?

b. How many possible five-stock portfolios are possible in which three of the stocks in your portfolio have the property that their price is more than $33 or their yield is below 0.3% (or both)?

c. How many possible five-stock portfolios are possible in which at least two of the stocks in your portfolio has a yield of more than 0.6%?

Answer 1

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