Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

*** PLEASE, HURRY UP BUT NEED CORRECT ANSWER *** Q1) JAllen has a 2-stock portfolio with a total value of $100,000. $37,500 is invested in

*** PLEASE, HURRY UP BUT NEED CORRECT ANSWER ***

Q1) JAllen has a 2-stock portfolio with a total value of $100,000. $37,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolios beta?

Q2) Dave holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875.

Stock Investment Beta

A $ 50,000 0.50

B 50,000 0.80

C 50,000 1.00

D 50,000 1.20

Total $200,000

If Dave replaces Stock A with another stock, E, which has a beta of 1.50, what will the portfolio's new beta be?

Q3) You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each. The portfolio's beta is 1.12. You plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.80. What will the portfolio's new beta be?

Q4) Consider the following information and then calculate the required rate of return for the Capital Ozne Company, which holds 4 stocks. The markets required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows:

Stock Investment Beta

A $200,000 1.50

B $300,000 -0.50

C $500,000 1.25

D $1,000,000 0.75

Q5) You hold four stocks in your portfolio: stock A, stock B, stock C, and stock D. The portfolio beta is 1.20. Stock C constitutes 40 percent of the dollar value of your holdings and has a beta of 1.60. If you sell all of your holdings in stock C, and replace them with an equal investment in stock E (which has a beta of 1.25), what will your new portfolio beta will be? Show your work.

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

The Limits Of Surveillance And Financial Market Failure Lessons From The Euro-Area Crisis

Authors: K. Shigehara (

1st Edition

1137471468, 1137471476, 9781137471468, 9781137471475

More Books

Students also viewed these Finance questions