Business, 03.11.2020 16:20 tmax8437

You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 11 percent. Assume your goal is to create a portfolio with an expected return of 12.45 percent. How much money will you invest in Stock X and Stock Y

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Answer from: 4801651052

Investment in stock X = 18000 * 29/60 = $8700

Investment in stock Y = 18000 * 31/60 = $9300

Explanation:

The expected return of portfolio is the function of the weighted average of the individual stock returns that form up the portfolio. The formula for the expected return of portfolio is,

Portfolio return = wA * rA + wB * rB + ... + wN * rN

Where,

w is the weight of each stock in the portfolior is the return of each stock

Let x be the investment in stock X.

Let (1-x) be the investment in stock Y

0.1245 = x * 0.14 + (1 - x) * 0.11

0.1245 = 0.14x + 0.11 - 0.11x

0.1245 - 0.11 = 0.14x - 0.11x

0.0145 = 0.03x

0.0145 / 0.03 = x

x = 29/60 or 0.483333 or 48.3333%

If x is 29/60, then (1-x) will be,

1 - 29/60 => 31/60 or 0.516667 or 51.6667%

The total investment if of $18000

Investment in stock X = 18000 * 29/60 = $8700

Investment in stock Y = 18000 * 31/60 = $9300

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

Answer from: Quest

answer; importance to people; or acceptance;

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