Question
1. You are invested 38.10% in growth stocks with a beta of 1.853, 36.70% in value stocks with a beta of 0.559, and 25.20% in
1. You are invested 38.10% in growth stocks with a beta of 1.853, 36.70% in value stocks with a beta of 0.559, and 25.20% in the market portfolio. What is the beta of your portfolio? After completing all calculations, please round your answer to four decimal places.
- Beta:
2. The market risk premium for next period is 9.10% and the risk-free rate is 2.10%. Stock Z has a beta of 1.212 and an expected return of 14.90%. Calculate the following. Please answers as percentages (e.g. .1234 should be written as 12.34):
- Market's reward-to-risk ratio: %
- Stock Z's reward-to-risk ratio: %
3. An analyst gathered the following information for a stock and market parameters: stock beta = 1.020; expected return on the Market = 12.00%; expected return on T-bills = 2.00%; current stock Price = $7.61; expected stock price in one year = $14.71; expected dividend payment next year = $1.60. Calculate the following. Please answers as percentages (e.g. .1234 should be written as 12.34):
- Required return for this stock: %
- Expected return for this stock: %
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
Answer 1 To calculate the beta of your portfolio we can use the following formula Portfolio beta Wei...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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