Question
Suppose that your existing portfolio has a beta of 1.3 and a value of $100,000. Existing Portfolio Beta 1.3 Existing Portfolio Value $100,000 A) Suppose
Suppose that your existing portfolio has a beta of 1.3 and a value of $100,000.
| Existing Portfolio Beta | 1.3 |
|---|---|
| Existing Portfolio Value | $100,000 |
A) Suppose that you sell $10,000 of the existing portfolio to buy a stock with a beta of 1.7. What is the portfolio beta?
The portfolio beta is . Round your answer to the nearest two decimal places.
B) Suppose that you convert 20% of the existing portfolio to a low-risk portfolio that has a beta of 0.7. What is the portfolio beta?
The portfolio beta is .Round your answer to the nearest two decimal places.
C) Suppose that you have an additional $15,000 in cash and buy a stock with a beta of 1.1 to add to the existing portfolio.
What is the portfolio beta?
The portfolio beta is . Round your answers to the nearest two decimal places.
Step by Step Solution
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Step: 1
A To calculate the new portfolio beta after buying a stock with a beta of 17 we can use the formula ...
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Introduction To Derivatives And Risk Management
Authors: Don M. Chance, Robert Brooks
10th Edition
130510496X, 978-1305104969
