ZuoTi.Pro
Question

Suppose that your portfolio consists of 20% of XYZ stock and 80% of CCC stock. XYZ...

Suppose that your portfolio consists of 20% of XYZ stock and 80% of CCC stock. XYZ has a beta of 1.5 and CCC has a beta of 1.3. What is the expected return of this portfolio according to the CAPM. Assume that the expected return on the market portfolio is 12% and the risk-free rate is 5% Enter your answer as a percent. Do not include the % sign. Round your final answer to two decimals.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Portfolio beta=Respective beta*Respective weight

=(0.2*1.5)+(0.8*1.3)=1.34

Expected return=risk free rate+beta*(market rate-risk free rate)

=5+1.34*(12-5)

=14.38

0 0
Add a comment
Know the answer?
Add Answer to:
Suppose that your portfolio consists of 20% of XYZ stock and 80% of CCC stock. XYZ...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Given a market portfolio with an expected return of 10% and standard deviation of 20% and...

    Given a market portfolio with an expected return of 10% and standard deviation of 20% and a risk-free rate of 5%, A. According to the Capital Market Line what is the expected return of a portfolio with a 30% standard deviation? B. What is the beta of the market portfolio? Enter your answer as a percent. Do not include the % sign. Round your final answer to two decimals.

  • 1. Given a market portfolio with an expected return of 10% and standard deviation of 20%...

    1. Given a market portfolio with an expected return of 10% and standard deviation of 20% and a risk-free rate of 5%, according to the Capital Market Line what is the expected return of a portfolio with a 30% standard deviation? Enter your answer as a percent. Do not include the % sign. Round your final answer to two decimals. 2.  What is the corresponding beta of the market portfolio?

  • Portfolio Returns. Suppose MegaChip has a beta of 1.3, whereas Littlewing stock has a beta of...

    Portfolio Returns. Suppose MegaChip has a beta of 1.3, whereas Littlewing stock has a beta of .7. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10% according to CAPM. What is the expected return of MegaChip stock? (4 points) What is the expected return of Littlewing stock? (4 points) What is the beta of a portfolio of 60% MegaChip and 40% Littlewing stock? (4 points) What is the expected return of a...

  • Your portfolio contains $4,300 worth of PG and $2,400 worth of HD stocks. What is the...

    Your portfolio contains $4,300 worth of PG and $2,400 worth of HD stocks. What is the expected return of your portfolio, if PG's beta is 0.8, HD's beta is 0.3, the risk free rate is 3.8% and the market's expected return is 10.8%? Assume that the CAPM holds. NFLX's standard deviation is 28% and the market's standard deviation is 25%. The correlation between the returns of NFLX and the market is -0.67. What percent of NFLX's variance is systematic? Provide...

  • Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent...

    Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent in Stock R, 40 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are . 78, 87, 1.13, and 1.45, respectively. What is the portfolio beta? Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 and the total portfolio is...

  • Suppose Intel stock has a beta of 1.7, whereas Boeing stock has a beta of 0.97....

    Suppose Intel stock has a beta of 1.7, whereas Boeing stock has a beta of 0.97. If the risk-free interest rate is 4.6% and the expected return of the market portfolio is 13.1%, according to the CAPM, a. What is the expected return of Intel stock? b. What is the expected return of Boeing stock? c. What is the beta of a portfolio that consists of 65% Intel stock and 35% Boeing stock? d. What is the expected return of...

  • Suppose Intel stock has a beta of 1.52​, whereas Boeing stock has a beta of 0.76....

    Suppose Intel stock has a beta of 1.52​, whereas Boeing stock has a beta of 0.76. If the​ risk-free interest rate is 4.4 % and the expected return of the market portfolio is 13.1 %​, according to the​ CAPM, a. What is the expected return of Intel​ stock? b. What is the expected return of Boeing​ stock? c. What is the beta of a portfolio that consists of 65 % Intel stock and 35 % Boeing​ stock? d. What is...

  • Suppose Intel stock has a beta of 1.57, whereas Boeing stock has a beta of 0.86....

    Suppose Intel stock has a beta of 1.57, whereas Boeing stock has a beta of 0.86. If the risk-free interest rate is 6.4% and the expected return of the market portfolio is 12.8%, according to the CAPM, a. What is the expected return of Intel stock? b. What is the expected return of Boeing stock? c. What is the beta of a portfolio that consists of 65% Intel stock and 35% Boeing stock? d. What is the expected return of...

  • Suppose that a portfolio consists of the following stocks: Stock Amount Beta Chevron $20,000 0.55 General...

    Suppose that a portfolio consists of the following stocks: Stock Amount Beta Chevron $20,000 0.55 General Electric 55,000 1.40 Whirlpool 25,000 1.20 The risk-free rate ( ) is 6 percent and the market risk premium ( ) is 8.4 percent. Determine the beta for the portfolio. Round your answer to two decimal places. Determine how much General Electric stock one must sell and reinvest in Chevron stock in order to reduce the beta of the portfolio to 1.00. Do not...

  • Suppose Intel stock has a beta of 1.6 ​, whereas Boeing stock has a beta of...

    Suppose Intel stock has a beta of 1.6 ​, whereas Boeing stock has a beta of 0.96 . If the​ risk-free interest rate is 4.7 % and the expected return of the market portfolio is 13.9 % ​, according to the​ CAPM, a. What is the expected return of Intel​ stock? ​(Round to one decimal​ place.) b. What is the expected return of Boeing​ stock? ​ c. What is the beta of a portfolio that consists of 55 % Intel...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT