Question
1. You have a $1,500 portfolio which is invested in stocks A and B plus a risk-free asset. $300 is invested in stock A. Stock
1. You have a $1,500 portfolio which is invested in stocks A and B plus a risk-free asset. $300 is invested in stock A. Stock A has a beta of 1.7 and stock B has a beta of 1.3. Approximately how much needs to be invested in stock B if you want your portfolio beta to equal that of the overall market?
A. $439 B. $519 C. $643 D. $681 E. $761
2.What is the portfolio variance if 60% is invested in stock K and 40% is invested in stock L?
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| Return if State Occurs | |
| State of Economy | Probability of State of Economy | Stock K | Stock L |
| Boom | 15% | 21% | 11% |
| Normal | 85% | 7% | 9% |
3.What is the variance of a portfolio consisting of $2,000 in stock B and $8,000 in stock C?
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| Return if State Occurs | |
| State of Economy | Probability of State of Economy | Stock B | Stock C |
| Boom | 5% | 20% | 4% |
| Normal | 95% | 9% | 8% |
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|
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|
A. .00000 B. .00084 C. .00108 D. .00132 E. .00197
4.What is the portfolio variance if 55% is invested in stock S and 45% is invested in stock T?
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|
| Returns if State Occurs | |
| State of Economy | Probability of State of Economy | Stock S | Stock T |
| Boom | 35% | 16% | 18% |
| Normal | 65% | 12% | 6% |
A. .002704 B. .006183 C. .011492 D. .030081 E. .052000
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
