Question 11 (Essay Worth 10 points)
(Diversifying Portfolios MC)
Two investment portfolios are shown.
Investment
Portfolio 1 Portfolio 2 ROR
Savings Account
$3,500
$1,450
2.80%
Government Bond $1,800
$2,200
-1.55%
Preferred Stock $1,950
$3,700
11.70%
Common Stock
$1,975
$1,500
8.49%
Portfolio 1 earns $465.93.
Part A: Calculate how much Portfolio 2 earns. Show all work. (5 points)
Part B: Using your values from Part A, identify the portfolio that earns the most. What information from the table could be used to
justify why that portfolio has higher earnings? (5 points)