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You bought an investment portfolio of 300 shares of xzy company and 700 share OZ Company...

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Finance

You bought an investment portfolio of 300 shares of xzy companyand 700 share OZ Company (5) years ago with total investment of$100,000. Today you can sell XZY for $125/share and OZ for155/share. XZY paid dividend $13.5/share per year and oz paid$18.5/share as its dividend each year. The following is the nextyear forecast relates to this portfolio. State of economyProbability of economic state Rate of return Boom 0.35 17% Normal0.55 13% Recession 0.10 -6% Required: 1) Calculate your dividendincome and capital gain from this portfolio if you decide to sellall the shares? 2) Calculate the expected return of the portfoliofor the next year 3) Determine the risk of the portfolio bycomputing portfolio standard deviation

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Part 1 Step 1 Calculate Purchase Value of Each Companys Stock We have not been given the purchase price in the question Therefore we will take the proportion of investment on the basis of number of shares in each company as the basis for arriving at purchase value of each companys stock as below Total Investment Value in Dollars 100000 Purchase Value of XZY Companys Stock Total Investment Value in DollarsNumber of XZY SharesTotal Shares Acquired 1000003001000 30000    See Answer
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You bought an investment portfolio of 300 shares of xzy companyand 700 share OZ Company (5) years ago with total investment of$100,000. Today you can sell XZY for $125/share and OZ for155/share. XZY paid dividend $13.5/share per year and oz paid$18.5/share as its dividend each year. The following is the nextyear forecast relates to this portfolio. State of economyProbability of economic state Rate of return Boom 0.35 17% Normal0.55 13% Recession 0.10 -6% Required: 1) Calculate your dividendincome and capital gain from this portfolio if you decide to sellall the shares? 2) Calculate the expected return of the portfoliofor the next year 3) Determine the risk of the portfolio bycomputing portfolio standard deviation

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