A Portfolio Has an Expected Return of 12

question 30

Multiple Choice

A portfolio has an expected return of 12.3 percent.This portfolio contains two stocks and one risk-free security.The expected return on Stock X is 9.7 percent and on Stock Y it is 17.7 percent.The risk-free rate is 3.8 percent.The portfolio value is $78,000 of which $18,000 is the risk-free security.How much is invested in Stock X?

• A)$18,600
• B)$19,667
• C)$21,375
• D)$22,204
• E)$24,800

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Definitions:

Direct Labour

The cost of wages for workers directly involved in the manufacture of products or the delivery of services.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as factory rent and salaries of permanent staff.

Variable Manufacturing Overhead

Variable manufacturing overhead includes all production costs that change with the level of production output and are not direct materials or direct labor, such as utilities for the manufacturing facility.

Direct Labour

The wages paid to workers directly involved in the production of goods or services, considered a variable cost.