Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help. 1. 2. 3. Expected retum of a portfolio using beta. The beta of four stocks- 0,H,L and Jare,0.42,0.78,1.04, and 1.64 , respectively and

please help.
1.
image text in transcribed
2.
image text in transcribed
3.
image text in transcribed
Expected retum of a portfolio using beta. The beta of four stocks- 0,H,L and Jare,0.42,0.78,1.04, and 1.64 , respectively and the beca of portiolio 1 is 0.97 , the beta of portiolio 2is0.81, and the beta of potiolio 3 is 1.11 . What are the expected tetums of each of the four individual assets and the three portiolios if the curent 5M, is ploted with an intercept of 4.0% (risk-free rate) and a maket premium of 10.0% (slope of the line)? What is the expected retuen of stock G ? 6 (Round to two decimal places) Changing risk level. Mr. Malone wants to change the overal risk of his pertfolio. Currenty, his porffelo is a combinabion of risky assets with a beta of 1.25 and an expected rebrn of should be in the rik-free asset? It he wants a beta of 0.75 ? If the wants a beta of 0.50 ? if he wants a beta of 0.25 ? Is there a patern here? It he wants a beta of 100 , then he should have X of his weath in the risicy portolio and W in the riskthee asset. (Found both answers to two decimal places') Reward-to-eish ratio. The Uplown Investment Club has 350,000 io invest in Fe equity markot. Chandler advocates investing the funds in Monica's Restaurant wa a beta of 1.3 and an expected rebarn of 15.7%. Ross advocates investing the funds in Fache/s Clothing Store with a beta of 0.9 and an expected return of 13.6%. The clib is split 50150 on the two yield of 3.25% ). Wrich stock do yoa selech? (Select the bet response) A. The choice is Rachers Clothing stere bused on the higher feravd-10 nsk raso 9.834 8. The choice is Moncis Restaurant based on the higher reward Horisk rato13 50% c. The choice a Monca's Restaurant based on the higher reward soesis rate of 13.504 D. The choice is Fachela Cletting Store based on be Righer renard-to-nick ratio of 11.50%

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

Step: 3

blur-text-image

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

Financial Management For Farmers And Rural Managers

Authors: Martyn Warren

4th Edition

0632048719, 9780632048717

More Books

Students also viewed these Finance questions