Question
Question 11 (1 point) Question 11 Unsaved Suppose you held a diversified portfolio consisting of a $1,000 investment in each of 10 different common stocks.
Question 11 (1 point) Question 11 Unsaved Suppose you held a diversified portfolio consisting of a $1,000 investment in each of 10 different common stocks. The portfolio's beta is 1.60. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 2.40 for $1,000 and use the proceeds to buy another stock with a beta of 1.00. What would your portfolio's new beta be? Question 11 options:
0.2000
1.0000
1.4600
1.7400
Question 12 (1 point)
HR Industries (HRI) has a beta of 2.2, while LR Industries' (LRI) beta is 0.80. The risk-free rate is 3%, and the required rate of return on an average stock is 10%. The expected rate of inflation built into rRF falls by 1.0 percentage points, the real risk-free rate remains constant, the required return on the market falls to 9.0%, and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI, that is, rHRI - rLRI.
Question 12 options:
10.78% | |||||||||||||||||||||||||||||||
10.29% | |||||||||||||||||||||||||||||||
9.31% | |||||||||||||||||||||||||||||||
9.80% | |||||||||||||||||||||||||||||||
8.82%
You have been managing a $900,000 portfolio that has a beta of 1.50 and a required rate of return of 15%. The current risk-free rate is 3.00%. Assume that you receive another $100,000. If you invest the money in a stock with a beta of 3.4, what will be the required return on your million dollar portfolio? Question 13 options:
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