1. Katherine Wilson is wondering how much she must undertake to generate an acceptable return on her portfolio. The risk-free return currently is 6%. The return on average stock (market return) is 14%. Use the CAMP to calculate the beta coefficient associated with a portfolio return of 20%
how can you calculate this using excel? Solve using excel
2. Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 65% of dollar value of the portfolio, and stock M will account for the other 35%. The expected returns over the next 6 years, 2015-2020, for each of the stocks are shown in the following table. Solve using excelformulas
| year |
Expected return |
Expected return |
| Year |
Stock L |
Stock M |
| 2015 |
15% |
23% |
| 2016 |
15% |
23% |
| 5017 |
17% |
23% |
| 2018 |
17% |
23% |
| 2019 |
17% |
23% |
| 2020 |
17% |
23%
|
| a. Calculate the expected portfolio return, for each of the 6 years. |
| b. Calculate the expected value of portfolio returns, over the 6-years period. |
| c. Calculate the standard deviation of expected portfolio returns, over the 6-year period. |
|
d. How would you characterize the correlation of returns of the two stocks L and M?
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