Investing Strategy: Portfolio of Wal-Mart Stock

What is the expected return and volatility of a portfolio invested in Wal-Mart stock?

Suppose you have invested all your capital ($30,000) in a portfolio of one stock only, Wal-Mart. Wal-Mart has an expected return of 13% and a volatility of 30%. How can you calculate the expected return and volatility of your portfolio?

Expected Return and Volatility Calculation:

If you invest all your capital of $30,000 in Wal-Mart stock, which has an expected return of 13% and a volatility of 30%, you can calculate the expected return and volatility of your portfolio using Excel.

Main Answer: If you invest all your capital of $30,000 in Wal-Mart stock, which has an expected return of 13% and a volatility of 30%, you can calculate the expected return and volatility of your portfolio using Excel.

Supporting Explanation: To calculate the expected return of the portfolio, you can multiply the weight of Wal-Mart stock (which is 100% since it's the only stock in your portfolio) by its expected return of 13%. The formula in Excel would be "=100% * 13%". This will give you the expected return of your portfolio.

To calculate the volatility of the portfolio, you can use the volatility of Wal-Mart stock (30%) as it's the only stock in your portfolio. The formula in Excel would be "=30%". This will give you the volatility of your portfolio.