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Your portfolio comprises four investments, with an equal dollar value invested in each. The four investments are 1) the S&P 500 market portfolio, 2) shares
Your portfolio comprises four investments, with an equal dollar value invested in each. The four investments are 1) the S&P 500 market portfolio, 2) shares of Tesla stock, 3) a General Motors bond, and 4) cash in a bank savings account which pays a guaranteed 0.50% interest this year. The CAPM betas for Tesla stock and the GM bond are 1.97 and 0.60, respectively. What is the beta of your entire portfolio? 0.67 0.89 1.01 1.20 O 1.44 O 1.67 A firm has book value of equity of $333 million. Its market capitalization is $600 million. It has $150 million in debt and $40 million in cash and short-term investments on the balance sheet. Its CAPM beta is 1.4, the yield to maturity on its debt is 5%, the corporate tax rate is 20%, and the required return on its equity is 11%. What is this firm's WACC? 7.7% 8.5% 9.9% 11.8% 12.2%
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