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UGBA 103 _4

# UGBA 103 _4 - UGBA 103 Haas School of Business Summer 2010...

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UGBA 103 Summer 2010 Haas School of Business John Gonzales Assignment #4 (due June 14) 1. Refer back to the portfolio calculations done in class. Calculate the expected return and risk of the portfolio for each of the following portfolios. Recall that the previous choices on the efficient frontier were portfolios e, f and g. How does the efficient frontier, i.e. the possible choices for a risk-averse investor, change when the four new portfolios are considered? (h) U.S. stocks: 30%; U.S. bonds: 30%; international stocks: 40%. (i) U.S. stocks: 25%; U.S. bonds: 20%; international stocks: 55%. (j) U.S. stocks: 20%; U.S. bonds: 40%; international stocks: 40%. (k) U.S. stocks: 20%; U.S. bonds: 20%; international stocks: 60%. 2. You are given the following information for company X and the financial markets. • ß of stock X = 1.4 • recent dividend = \$2.00 • constant growth rate = 8% • projected stock market return = 14% • yield on a 10-year treasury = r RF = 6.46% (a) Using the constant dividend growth model, calculate today’s stock price.

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UGBA 103 _4 - UGBA 103 Haas School of Business Summer 2010...

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