You invest $800 in security A with a beta of 1.5 and $600 in security B...

Question

Question

You invest $800 in security A with a beta of 1.5 and $600 in security B with a beta of 0.4. The beta of this portfolio is _________.

A. 0.60
B. 1.43

C. 1.03

D. 1.03

Answer 1

Answer #1

Ans C/D. 1.03

Stock	INVESTMENT (i)	Beta (ii)	Investment* Beta (i)* (ii)
A	800	1.50	1,200.00
B	600	0.40	240.00
Total	1,400		1,440.00


AVERAGE BETA =	(INVESTMENT * BETA) / TOTAL INVESTMENT
	1440 / 1400
	1.03

Answer 2

Similar Homework Help Questions

You invest $1,400 in security A with a beta of 1.3 and $1,200 in security B...

You invest $1,400 in security A with a beta of 1.3 and $1,200 in security B with a beta of 0.4. The beta of this portfolio is Multiple Choice о о О
You invest $650 in security A with a beta of 1.2 and $450 in security B...

You invest $650 in security A with a beta of 1.2 and $450 in security B with a beta of 0.7. The beta of this portfolio is О О О О
You want to invest $40,000 in a portfolio with a beta of no more than 1.37...

You want to invest $40,000 in a portfolio with a beta of no more than 1.37 and an expected return of 12.1%. Bay Corp. has a beta of 1.03 and an expected return of 10.1%, and City Inc. has a beta of 1.82 and an expected return of 14.77%. The risk-free rate is 4%. Is it possible to create this portfolio investing in Bay Corp. and City Inc.? If so, how much will you invest in each? (Select from the...

16. Portfolio A,B’s beta is closest to: a. 0.80 b. 0.92 c. 1.00 d. 1.08 e....

16. Portfolio A,B’s beta is closest to: a. 0.80 b. 0.92 c. 1.00 d. 1.08 e. 1.20 Assume the risk free rate is 2.0%. The SP500 is considered the market. Today (T-0), you invest $400 in Stock A and $600 in Stock B to create Portfolio A,B. Assume there are not taxes or dividends. The one year performance of the stocks and the market is summarized in the table below. Use this information to help answer questions 16-20. Total Return...
. (Portfolio beta and security market line) You own a portfolio consisting of the following stocks...

. (Portfolio beta and security market line) You own a portfolio consisting of the following stocks The risk-free rate is 4 percent. Also, the expected return on the market portfolio is 9 percent. a. Calculate the expected return of your portfolio (Hint: The expected return of a portfolio equals the weighted average of the individual stocks' expected returns where the weights are the percentage invested in each stock.) b. Calculate the portfolio beta. c. Given the foregoing information, plot the...
You invest 6% of your money in Stock A, -2% in Stock B, and the remainder...

You invest 6% of your money in Stock A, -2% in Stock B, and the remainder in Stock C. Stock A has a beta of 0.1, Stock B has a beta of 1.2, and Stock C has a beta of 0.4. What is the beta of your portfolio?

a. 17. You have been managing a $4 million portfolio that has a beta of 1.5...

a. 17. You have been managing a $4 million portfolio that has a beta of 1.5 and a required rate of return of 13%. The current risk-free rate is 5.5%. Assume that you receive another $1 million. If you invest the money in a stock with a beta of 1.75, what will be the required return on your $5 million portfolio? 10.75% b. 11.50% c. 12.25% d. 12.75% e. 13.25% I 18. A stock is exnected to nay lividend of...
Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is...

Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is 5% and the market risk premium is 6%. a)Explain the terms beta and market risk premium. b)What is the market portfolio? c)According to the CAPM, what return do investors expect on the security? d)Investors expect the security not to pay any dividend next year. e)At what price do investors expect the security to trade next year? f)At what price do investors expect the security...
Security T-Bill = 1.4% S&P 500 = 8% Beta 1.22 0.84 2.21 0.67 0.36 Based on...

Security T-Bill = 1.4% S&P 500 = 8% Beta 1.22 0.84 2.21 0.67 0.36 Based on the CAPM, what are the expected returns on the 5 stocks (A, B, C, D, E)? (12 points) If you invest 30% in the S&P 500, 20% in T-Bill, and 10 % each in the 5 stocks, what is the beta of your portfolio? (4 points)

You want to invest $41,000 in a portfolio with a beta of no more than 1.55...

You want to invest $41,000 in a portfolio with a beta of no more than 1.55 and an expected return of 13.1% Bay Corp. has a beta of 1.14 and an expected return of 10.4%, and City Inc. has a beta of 1.83 and an expected return of 14,88%. The risk-free rate is 3%. Is it possible to create this portfolio investing in Bay Corp. and City Inc? how much wil vou invest in each? (Select from the drop-down menu)...