Problem 11-22 Portfolio Expected Return [LO 1] You have $264,000 to invest in a
ID: 2765566 • Letter: P
Question
Problem 11-22 Portfolio Expected Return [LO 1]
You have $264,000 to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.4 percent, and Stock L, with an expected return of 11.5 percent.
If your goal is to create a portfolio with an expected return of 12.7 percent, how much money will you invest in Stock H and in Stock L? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
You have $264,000 to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.4 percent, and Stock L, with an expected return of 11.5 percent.
Explanation / Answer
Stock Amount Weight Rate of Return Return Investment H 264000 0.4138 14.40% 15731.02 109243.2 L 264000 0.5862 11.50% 17797.03 154756.8 264000 12.70 33528.05 264000 Rate of Return =33528.05/264000*100 12.7000