Wilson Miller has his first full time job and is considering how to invest his savings. His dad suggested he invest no more than 25% of his savings in the stock of his employer (EMR) so he is considering investing the remaining 75% in a combination of risk-free investments in the US Treasury Bills, currently paying 4% and Starbucks (SBUX) common stock. Wilson father has invested in the stock market for many years and suggested that Wilson might expect to earn 9% in the Emerson shares and 12% from the Starbucks shares. Wilson decides to put 25% in the Emerson shares, 25% in the Starbucks shares and the remaining 50% in Treasury Bills. Given Wilson Portfolio Allocation, what rate of return should he expect to receive on his investment? The expected rate of return for Wilson’s portfolio, can be calculated as a weighted average of these expected rates of return, where the weights are the proportions of each investments. Question 1a. Calculate the expected rate of return for Wilson Portfolio, in a tabular format display this information and calculate the portfolio return Question 1b. Calculate the expected return for Wilson’s portfolio, where he places a quarter of his money in Treasury Bills, half in Starbucks and the remainder in EMR
Wilson Miller has his first full time job and is considering how to invest his savings. His dad suggested he invest no more than 25% of his savings in the stock of his employer (EMR) so he is considering investing the remaining 75% in a combination of risk-free investments in the US Treasury Bills, currently paying 4% and Starbucks (SBUX) common stock. Wilson father has invested in the stock market for many years and suggested that Wilson might expect to earn 9% in the Emerson shares and 12% from the Starbucks shares. Wilson decides to put 25% in the Emerson shares, 25% in the Starbucks shares and the remaining 50% in Treasury Bills. Given Wilson Portfolio Allocation, what rate of return should he expect to receive on his investment?
The expected rate of return for Wilson’s portfolio, can be calculated as a weighted average of these expected
Question 1a.
Calculate the expected rate of return for Wilson Portfolio, in a tabular format display this information and calculate the portfolio return
Question 1b.
Calculate the expected return for Wilson’s portfolio, where he places a quarter of his money in Treasury Bills, half in Starbucks and the remainder in EMR
Step by step
Solved in 3 steps with 2 images
