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
|
5%
|
$40,000
|
|
B
|
18%
|
$25,000
|
|
C
|
15%
|
$35,000
|
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 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?