Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that you have an investment portfolio of $200,000. The investment consists of $100,000 in Amazon and $100,000 in Apple. You are thinking of rebalancing

Assume that you have an investment portfolio of $200,000. The investment consists of $100,000 in Amazon and $100,000 in Apple. You are thinking of rebalancing the portfolio by selling $30,000 worth of Alphabet and $30,000 worth of Apple. You plan to invest the realized proceeds of $60,000 in Facebook stock. Assume that betas of Amazon (1.63), Apple (0.99), and Facebook (1.18). A. What would be the beta of your new portfolio? B. Say you decide to sell off all the three stocks and invest 50% in treasury bonds and the remaining 50% in S&P 500 Index fund. What would be the new beta of your portfolio?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Managerial Finance

Authors: Scott Besley, Eugene F. Brigham

12th Edition

0030258723, 9780030258725

More Books

Students also viewed these Finance questions