ZuoTi.Pro
Question

- Securny has more systematic risk? 2. You have $57,000 to invest, and you want to invest in two stocks in such a way that yo

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

Homework Answers

Answer #1

Beta of Market = 1,

Let w be invested in Dow Chemical,

So,

1 = w(1.37) + (1 - w)(0.80)

w = 0.3509

Amount in Dow Chemical = (0.3509)(57,000) = $20,001.30

Amount in American Express = (1 - 0.3509)(57,000) = $36,998.70

0 0
Add a comment
Know the answer?
Add Answer to:
- Securny has more systematic risk? 2. You have $57,000 to invest, and you want to...
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

  • number 2 Fall 2019 609 1. Consider the following two stocks: Probability Return on Stock A...

    number 2 Fall 2019 609 1. Consider the following two stocks: Probability Return on Stock A (20%) (9% Recession ) 42% Normal Boom 20% 26% The market risk premium is 10%, and the risk free rate is 4%. a) Which security has more total risk? Return on Stock B -30% 12% 44% b) Which security has more systematic risk? 2. You have $57,000 to invest, and you want to invest in two stocks in such a way that your resulting...

  • You have $134,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free...

    You have $134,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 13 percent and that has only 72 percent of the risk of the overall market. If X has an expected return of 32 percent and a beta of 1.6, Y has an expected return of 20 percent and a beta of 1.2, and...

  • You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free...

    You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 15% and that has only 120% of the risk of the overall market. If Stock R has an expected return of 25% and a beta of 1.6, Stock S has an expected return of 17.5% and a beta of 1.3, and the risk-free...

  • 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...

  • You have $98,483 to invest in two stocks and the risk-free security. Stock A has an...

    You have $98,483 to invest in two stocks and the risk-free security. Stock A has an expected return of 10.18 percent and Stock B has an expected return of 11.04 percent. You want to own $25,007 of Stock B. The risk-free rate is 5.16 percent and the expected return on the market is 12.39 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest (in $) in the...

  • You have $99,445 to invest in two stocks and the risk-free security. Stock A has an...

    You have $99,445 to invest in two stocks and the risk-free security. Stock A has an expected return of 13.34 percent and Stock B has an expected return of 11 percent. You want to own $30,372 of Stock B. The risk-free rate is 3.03 percent and the expected return on the market is 10.49 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest (in $) in the...

  • You have $87,569 to invest in two stocks and the risk-free security. Stock A has an...

    You have $87,569 to invest in two stocks and the risk-free security. Stock A has an expected return of 12.38 percent and Stock B has an expected return of 9.36 percent. You want to own $28,905 of Stock B. The risk-free rate is 5.06 percent and the expected return on the market is 12.04 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest (in $) in the...

  • The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.

    The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.a. How much should you invest in the market portfolio and the risk-free investment if you want portfolio P to have an expected return of 40%?b. How much should you invest in the market portfolio and the risk-free investment...

  • You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free...

    You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 15% and that has only 120% of the risk of the overall market. If Stock R has an expected return of 25% and a beta of 1.6, Stock S has an expected return of 17.5% and a beta of 1.3, and the risk-free...

  • You have $81,871 to invest in two stocks and the risk-free security. Stock A has an...

    You have $81,871 to invest in two stocks and the risk-free security. Stock A has an expected return of 13.17 percent and Stock B has an expected return of 10.03 percent. You want to own $29,241 of Stock B. The risk-free rate is 5.21 percent and the expected return on the market is 11.24 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest (in $) in the...

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