Question 8 (4 points) Consider the following portfolio: Stock Investment Beta $1500000.20 B $225000 0.50 $300000...

Question

Question

Question 8 (4 points) Consider the following portfolio: Stock Investment Beta $1500000.20 B $225000 0.50 $300000 0.05 $75000

Answer 1

Answer #1

Weight of each stock = investment in stock / total investment

Stock A = 150,000/ 750,000 = 20%

Stock B = 225,000/ 750,000 = 30%

Stock C = 300,000/ 750,000 = 40%

Stock D = 75,000 / 750,000 = 10%

The beta of portfolio = weight of stock × beta of stock

= 20% × 0.20 + 30% × 0.50 + 40% × 0.05 + 10% × 1.4

= 0.04 + 0.15 + 0.02 + 0.14

= 0.35

Answer 2

Similar Homework Help Questions

Paul McLaren holds the following portfolio: Stock Investment Beta A $150,000 1.40 B 50,000 0.80 C...

Paul McLaren holds the following portfolio: Stock Investment Beta A $150,000 1.40 B 50,000 0.80 C 100,000 1.00 D 75,000 1.20 Total $375,000 Paul plans to sell Stock A and replace it with Stock E, which has a beta of 0.75. By how much will the portfolio beta change? a. −0.260 b. −0.286 c. −0.190 d. −0.211 e. −0.234
Calculate the beta for Stock B. Consider a portfolio that is one-third invested in Stock A...

Calculate the beta for Stock B. Consider a portfolio that is one-third invested in Stock A and one-third invested in Stock B, as well as, one-third invested in a risk-free asset. Stock A has a beta of 1.54. The total portfolio parallels the risk to the market. Download the linked spreadsheet template and use it for your answer. Once complete, upload the template to this question. Don't forget to show your work! Input area: Weight of risk-free 33.33% Weight of...
You hold the following portfolio: Stock Investment Beta $150.000 1.40 $50,000 0.80 $100,000 1.00 1.20 $75,000...

You hold the following portfolio: Stock Investment Beta $150.000 1.40 $50,000 0.80 $100,000 1.00 1.20 $75,000 $375,000 Total You plan to sell Stock A and replace it with Stock E, which has a beta of 0.80. By how much will the portfolio beta change? Do not round your intermediate calculations. a.-0.194 b. -0.271 OC -0.240 d. -0.290 e-0.230

Tom Noel holds the following portfolio: Stock Investment Beta $150,000 1.40 $50,000 0.80 $100,000 1.00 $75,000...

Tom Noel holds the following portfolio: Stock Investment Beta $150,000 1.40 $50,000 0.80 $100,000 1.00 $75,000 1.20 Total $375,000 Tom plans to sell Stock A and replace it with Stock E, which has a beta of 0.83. By how much will the portfolio beta change? Do not round your intermediate calculations.
Jim Keys holds a $200,000 portfolio consisting of the following stocks: Stock Investment Beta Alpha $50,000...

Jim Keys holds a $200,000 portfolio consisting of the following stocks: Stock Investment Beta Alpha $50,000 0.50 Beta $50,000 0.80 Gamma $50,000 1.00 Delta $50,000 1.30 What is the portfolio's beta?
COVESE 8-You hold the following portfolio: Stock Investment Beta $150,000 1.40 B 50,000 0.80 C 100.000...

COVESE 8-You hold the following portfolio: Stock Investment Beta $150,000 1.40 B 50,000 0.80 C 100.000 1.00 75,000 1.20 Total $375,000 D What is the portfolio's beta? 9-A firm has some bonds maturing in 7 years, with par value of $1,000. Those bonds make annual coupon payment of $70. The market interest rate on similar bonds is 8.5%. What is the bond's price? 10-A firm has some bonds maturing in 10 years. They have a par value of $1,000 and...

Question 8 (0.2 points) Consider the following probability distribution of returns on stock XYZ. What is...

Question 8 (0.2 points) Consider the following probability distribution of returns on stock XYZ. What is the expected return of stock XYZ? (Enter your answer as a percentage rounded to 2 decimal places. For example, enter 8.43%, instead of 0.0843) Probability Return 0.20 -3% 0.40 12% 0.40 27% Your Answer: Answer units View hint for Question 8 Question 9 (0.2 points) Calculate the expected return on a portfolio that contains 30% of a stock with an expected return of 1%...
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...
What is the beta for the following portfolio? Stock Investment 5,000 7,500 9,000 15,000 11,500 Beta...

What is the beta for the following portfolio? Stock Investment 5,000 7,500 9,000 15,000 11,500 Beta 0.65 0.85 1.25 0.89 1.42 O a) 1.142 b) 1.053 c) 0.978 d) 1.134 e) 1.045

What is the beta of the following portfolio? Stock Beta Investment 1.2 $150,000 $180,000 с 0.5...

What is the beta of the following portfolio? Stock Beta Investment 1.2 $150,000 $180,000 с 0.5 $130,000 1.4 $140,000 Round to the second decimal place.