Portlolio return and beta Personal Finance Problem Jae Pners invesed stot,000 to
ID: 2618213 • Letter: P
Question
Portlolio return and beta Personal Finance Problem Jae Pners invesed stot,000 to set up tre ollowing portolio one year ago . Calculane the portolio beta on the bass ofe original cost ures b. Calculate the pencentage retun of each asset in the porlio for the year Calculane the percentage retun of the portolo on the basis of original cost, using income and gains during the year d. Atthe trne Jame made his mestnents, investors were estmatingnatthe manar reun tor the coming year would be 10% The estimate ofthe nsk-bee rane af reun averaged 3%for the corng year Calaiate an expected rateofreumfor each stock on the basis ofts beta and he xpecatons of markeand risk-tree tums e. On the basis of the actual resuits, each stock in the portfolio performed diflerentily relative to thase CAPM-generated expectations of performance. What factors could explain these difnces? a. The portolio beta on the basis of the original cost Squres is 1.17 Round to two decimal places) b. The percentage reum for asset A for me year-E22% (Round to huo decnal poees ? The percentage tetum for asset ®fer me year-Eins Round to huodeemal place$) The pencentage return for asset C for the yeer isRound to two decimal places The pencentage retun C. The percentage return of the partolio on the bass of original cost, using inoome and gains during d. Al the time Jamie made his investments, investors were estmating hat the market reurn for the The expected rate of retum tor asset Aisaa8%?Roundtotodecrw places ) The expected rate of retintr asset@n879% (Round to two decrnal place. 1 The expected rae of returm for assetRound to two decimal places Data Table Click on the icon lecaned on the top-ight conee of tre data table below in order to copy its contents into nor asset Dformeyear«D%. re year lSL1% Round totwo dec mwoaces ) Rond totwo decry places) 532,000 31,000 $1.500 1.55 37.500 Print DoneExplanation / Answer
Percentage return for asset D=(End of year value + Income)/(Beginning value)-1=(15500+425)/(15000)-1=6.167%