Please Help.
Suppose that a portfolio consists of 3 securities (1,2,3). Expected rates of return are: 5%, 9%, 14% of the 3 securities, respectively.
(1) Find the expected rate of return on each of the two portfolios of these securities:
Portfolio A where w1=w2=w3
Portfolio B where w1=w2 and w2=2w3
(I solved this)
(2) Assume both portfolios have the same risk (10%) which one would you choose?
(I solved this)
(3) Assume your portfolio amount or wealth is $10000, how much have you invested in each of the three securities in your chosen portfolio.
(I solved this)
(4) Find the expected total cash flow and expected net cash flow of the portfolio at the end of the period.
(Don't have formula for this, cannot solve. If someone can help me out, please lead me in the right direction)
sorry for beging 14 year late
the answer c
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d
d
d
a
b
c
a
a
who else wasnt even a year old when johhny asked his question
To find the expected total cash flow and expected net cash flow of the portfolio at the end of the period, we need information about the cash flows associated with each security in the portfolio.
The total cash flow can be calculated by multiplying the amount invested in each security by the corresponding expected rate of return and summing them up.
The net cash flow can be calculated by subtracting any expenses or costs associated with the portfolio from the total cash flow.
Since we do not have any specific information about the cash flows or expenses, it is not possible to provide a specific answer. However, if you have any additional details or assumptions regarding the cash flows or expenses, I can guide you through the calculations.
To find the expected total cash flow and expected net cash flow of the portfolio at the end of the period, you need to consider both the expected rate of return and the investment amounts in each security.
Let's call the investment amount in Security 1 as X1, in Security 2 as X2, and in Security 3 as X3. The expected total cash flow is the sum of the expected returns on each security, multiplied by the invested amounts:
Total Cash Flow = (Expected Return on Security 1 * X1) + (Expected Return on Security 2 * X2) + (Expected Return on Security 3 * X3)
However, since you already know the investment amounts in each security from the previous question, you can simply substitute those values into the equation to find the total cash flow.
Regarding the expected net cash flow, this refers to the total cash flow minus the initial investment. Assuming there were no additional investments or withdrawals during the period, the initial investment amount would be equal to the total portfolio value of $10,000.
Therefore, the Expected Net Cash Flow = Total Cash Flow - Initial Investment
By calculating these values, you will have the expected total cash flow and the expected net cash flow of the portfolio at the end of the period.