You Want to Create a $48,000 Portfolio That Consists of Three

question 2

Multiple Choice

You want to create a $48,000 portfolio that consists of three stocks and has an expected return of 14.5 percent.Currently,you own $16,700 of Stock A and $24,200 of Stock B.The expected return for Stock A is 18.7 percent,and for Stock B it is 11.2 percent.What is the expected rate of return for Stock C?

• A)13.67 percent
• B)14.14 percent
• C)15.38 percent
• D)15.87 percent
• E)16.11 percent

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Definitions:

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios), thereby helping decision-making in the face of uncertainty.

Alternative Situations

Different scenarios or conditions that could occur, often considered when planning or making decisions.

Uncertainty

The lack of complete certainty, that is, the existence of more than one possibility in the outcome of a future event.

Econometric

Relating to econometrics, the branch of economics that applies statistical and mathematical methods to analyze economic data and test theories.