Ask Question
7 October, 19:06

You have $24,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 13 percent and Stock Y with an expected return of 12 percent. If your goal is to create a portfolio with an expected return of 12.65 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answer to the nearest dollar, e. g., 32.)

+5
Answers (1)
  1. 7 October, 19:25
    0
    Investment in stock X is $15,600 and Investment in stock Y is $8,400

    Explanation:

    Assuming the weights of the Stock X and Stock Y be Q and R

    So,

    Q + R = 1

    R = 1 - Q

    (Q * 13%) + (R * 12%) = 12.65%

    13 Q + [ (1 - Q) * 12] = 12.65

    13 Q - 12 Q + 12 = 12.65

    Q = 12.65 - 12

    Q = 0.65

    R = 1 - Q

    = 1 - 0.65

    = 0.35 or 35%

    Therefore, the investment in stock X and Y is as:

    Investment in stock X = Amount * Percentage

    = $24,000 * 65%

    = $15,600

    Investment in stock Y = Amount * Percentage

    = $24,000 * 35%

    = $8,400
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “You have $24,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 13 percent and Stock Y with an ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers