FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You want to form a portfolio that has the same systematic risk as the market, and you have $1,000,000 to invest in stocks A, B

You want to form a portfolio that has the same systematic risk as the market, and you have $1,000,000 to invest in stocks A, B and C. You invest $400,000 in Stock A, which has a beta of 1.25, and $100,000 in Stock B, which has a beta of 1.60. What will the beta of Stock C need to be, to fit your systematic risk requirement?

(Please express your answer as a decimal to two decimal places.)

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

Surviving In General Management

Surviving In General Management

Authors: Philip Berman, Pauline Fielding

1st Edition

9780333483145

More Books

Students also viewed these Finance questions

Question

How will Tamara do as president of the student council?

Answered: 1 week ago

Question

★★★★★
1. What is the macro and industry environment in the Southeast Asian region for the entrance of new budget airlines? What opportunities and challenges are associated with this environment? 2. How...

Answered: 1 week ago

Question

★★★★★
You want to form a portfolio that has the same systematic risk as the market, and you have $1,000,000 to invest in stocks A, B and C. You invest $400,000 in Stock A, which has a beta of 1.25, and...

Answered: 1 week ago

Question

★★★★★
(a) What are the 3 main characteristics of a platform business and traditional business? (6 marks) (b) List the participant/customer from (1) to (vi) in the column of subsidy-based and service-based...

Answered: 1 week ago

Question

★★★★★
7 . Individual Problems 16-6 Pharmaceutical Benefits Managers (PBMs) are intermediaries between upstream drug manufacturers and downstream insurance companies. They design formularies (lists of drugs...

Answered: 1 week ago

Question

★★★★★
Salazer, a young boy from El Salvador, was raised by grandparents who abused him. He lived in dire poverty and ran with street gangs. When he returned to his parents and sister, he had violent...

Answered: 1 week ago

Question

★★★★★
Attempts 7. Individual Problems 16-6 Average/2 Pharmaceutical Benefits Managers (PBMs) are intermediaries between upstream drug manufacturers and downstream insurance companies. They design...

Answered: 1 week ago

Question

★★★★★
Pharmaceutical Benefits Managers (PBMS) are intermediaries between upstream drug manufacturers and downstream insurance companies. They design formularies (lists of drugs that insurance will cover)...

Answered: 1 week ago

Question

★★★★★
Capital Goods Production, Economic Growth, and Trade-Around the World The construction of an iron bridge in the town of Ironbridge provided an improvement in technology. Modify the graph to reflect...

Answered: 1 week ago

Previous Question Next Question