Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your mother's well - diversified portfolio has an expected return of 1 2 . 0 % and a beta of 1 . 2 0 .

Your mother's well-diversified portfolio has an expected return of 12.0% and a beta of 1.20. She is in the process of buying 100 shares of Safety Corp. at $10 a share and adding it to her portfolio. Safety has an expected return of 18.0% and a beta of 2.50. The total value of your current portfolio is $9,000. What will the expected return and beta on the portfolio be after the purchase of the Safety stock?
Select the correct answer.
a.rp=12.72%,bp=1.42
b.rp=12.68%,bp=1.39
c.rp=12.60%,bp=1.33
d.rp=12.64%,bp=1.36
e.rp=12.56%,bp=1.30
image text in transcribed

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

International Financial Management

Authors: Jeff Madura

7th Edition

0324071744, 978-0324071740

More Books

Students also viewed these Finance questions

Question

7 How can a culture encourage ethical (or unethical) behaviour?

Answered: 1 week ago