Homework Answers
Answer to Question 1 is Beta of Stock B is "1.10"
Answer to Question 2 is Probability of Boom is "35.00%"
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You want to construct a portfolio containing U.S. Treasury bills and two stocks. Its weight in...
show work < 0.55 21. Your portfolio has a beta of 1.18. The portfolio consists of $3000 in U.S. Treasury bills, $800...
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< 0.55 21. Your portfolio has a beta of 1.18. The portfolio consists of $3000 in U.S. Treasury bills, $8000 in stock A, and $5500 in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? 0 Find Total value of portfolio: 1.10 1.24 8000 + 5500 + 3000 = 16, SOO 1.85 2.09 o் ③ Beta portfolio = 1.18= 10 x 3000 16,500) + (1x8000 TES
What is the standard deviation of the returns on a portfolio that is invested in Stocks...
What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C. Probability of State of Rate of Return State of Economy Economy if State Occurs Stock Stock A Stock B Boom 04 .17 .09 .09 Normal .81 .08 .06 Recession .15 - 24 .02 - a. 3.28% O b. 4.91% OC 5.65% O...
You are considering investing $1,800 in a complete portfolio. The complete portfolio is composed of Treasury...
You are considering investing $1,800 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P.constructed with two risky securities, X and Y. The optimal weights of X and Y in Pare 60% and 40% respectively. X has an expected rate of return of 13%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 7%, you should invest...
Consider the following information on a portfolio of three stocks: State of Probability of Stock A...
Consider the following information on a portfolio of three stocks: State of Probability of Stock A Stock B Stock C Economy State of Economy Rate of Return Rate of Return Rate of Return Boom .14 .11 .36 .51 Normal .51 .19 .21 .29 Bust .35 .20 − .20 − .39 a. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolio’s expected return, the variance, and the standard deviation?...
19. You own the following portfolio of stocks. What is the portfolio weight of stock C?...
19. You own the following portfolio of stocks. What is the portfolio weight of stock C? Number Stock of Shares 500 200 600 100 Price per Share $14 $23 $18 $47 A. 39.85 percent B. 42.86 percent C. 44.41 percent D. 48.09 percent E. 52.65 percent 20. What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40 percent in stock T? State of Economy Boom Normal Probability of State of...
Consider the following information on a portfolio of three stocks: State of Probability of State of...
Consider the following information on a portfolio of three stocks: State of Probability of State of Economy Economy .13 Stock A Stock B Stock C Rate of Return Rate of Return Rate of Return .50 .20 .16 -21 Boom Normal .32 .02 10 .55 .32 Bust -35 a. If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? (Do not round...
B2 Consider the following information on a portfolio of three stocks: State of Probabil f Stock...
B2 Consider the following information on a portfolio of three stocks: State of Probabil f Stock A Stock B Stock C Rate of Return Rate of Return Rate of Return 21 15 -22 Economy State of Ec Boom Normal Bust 15 80 05 .05 08 18 .07 The portfolio is invested 35 percent in each Stock A and Stock B and 30 percent in Stock C If the expected T-bill rate is 3.90 percent, what is the expected risk premium...
You decide to invest in a portfolio consisting of 35 percent Stock A, 35 percent Stock...
You decide to invest in a portfolio consisting of 35 percent Stock A, 35 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State of Economy .19 Recession Normal Boom Return if State Occurs Stock A Stock B Stock C - 18.4% - 3.7% -22.6% 10.6% 8.3% 16.9% 28.2% 15.6% 31.5% .53 .28 Multiple Choice 0 10.37% 0 10.85% 0 ) 11.32%...
Fina 300 Part Two 1.Using the probability distribution shown below, calculate Stock XYZs expected return, Elr),...
Fina 300 Part Two 1.Using the probability distribution shown below, calculate Stock XYZs expected return, Elr), and standard deviation o (r). ession=0.45 X 012-4.5% ady = 0.35*0.12=4.27. on = 0.20 × 0,20= 4/ State of the Economy Recession Steady Boom Probability of Return in Economic Economic State State 45% -10% 35% 12% 20% 20% 2. Suppose that you invest your $300,000 in the following assets: Investment Beta Amount Stock A 1.2 $120,000 Stock B 0.96 $ 90,000 Stock C 1.30...
You want to invest in a portfolio that consists of two stocks: AAA and BBB. According...
You want to invest in a portfolio that consists of two stocks: AAA and BBB. According to your analysis, you are expecting three states of nature: recession, steady and expansion, with probabilities of 0.2, 0.5 and 0.3 respectively. Current AAA stock price is $50, while BBB stock is $40. The following table show the analysts' prediction for the price in each state: State of Economy Probability AAA stock BBB STOCK Recession 0.2 $41 Steady 0.5 $54 $42 Expansion 0.3 $58...
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< 0.55 21. Your portfolio has a beta of 1.18. The portfolio consists of $3000 in U.S. Treasury bills, $8000 in stock A, and $5500 in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? 0 Find Total value of portfolio: 1.10 1.24 8000 + 5500 + 3000 = 16, SOO 1.85 2.09 o் ③ Beta portfolio = 1.18= 10 x 3000 16,500) + (1x8000 TES
What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C. Probability of State of Rate of Return State of Economy Economy if State Occurs Stock Stock A Stock B Boom 04 .17 .09 .09 Normal .81 .08 .06 Recession .15 - 24 .02 - a. 3.28% O b. 4.91% OC 5.65% O...
You are considering investing $1,800 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P.constructed with two risky securities, X and Y. The optimal weights of X and Y in Pare 60% and 40% respectively. X has an expected rate of return of 13%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 7%, you should invest...
19. You own the following portfolio of stocks. What is the portfolio weight of stock C? Number Stock of Shares 500 200 600 100 Price per Share $14 $23 $18 $47 A. 39.85 percent B. 42.86 percent C. 44.41 percent D. 48.09 percent E. 52.65 percent 20. What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40 percent in stock T? State of Economy Boom Normal Probability of State of...
Consider the following information on a portfolio of three stocks: State of Probability of State of Economy Economy .13 Stock A Stock B Stock C Rate of Return Rate of Return Rate of Return .50 .20 .16 -21 Boom Normal .32 .02 10 .55 .32 Bust -35 a. If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio's expected return, the variance, and the standard deviation? (Do not round...
B2 Consider the following information on a portfolio of three stocks: State of Probabil f Stock A Stock B Stock C Rate of Return Rate of Return Rate of Return 21 15 -22 Economy State of Ec Boom Normal Bust 15 80 05 .05 08 18 .07 The portfolio is invested 35 percent in each Stock A and Stock B and 30 percent in Stock C If the expected T-bill rate is 3.90 percent, what is the expected risk premium...
You decide to invest in a portfolio consisting of 35 percent Stock A, 35 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State of Economy .19 Recession Normal Boom Return if State Occurs Stock A Stock B Stock C - 18.4% - 3.7% -22.6% 10.6% 8.3% 16.9% 28.2% 15.6% 31.5% .53 .28 Multiple Choice 0 10.37% 0 10.85% 0 ) 11.32%...
Fina 300 Part Two 1.Using the probability distribution shown below, calculate Stock XYZs expected return, Elr), and standard deviation o (r). ession=0.45 X 012-4.5% ady = 0.35*0.12=4.27. on = 0.20 × 0,20= 4/ State of the Economy Recession Steady Boom Probability of Return in Economic Economic State State 45% -10% 35% 12% 20% 20% 2. Suppose that you invest your $300,000 in the following assets: Investment Beta Amount Stock A 1.2 $120,000 Stock B 0.96 $ 90,000 Stock C 1.30...
You want to invest in a portfolio that consists of two stocks: AAA and BBB. According to your analysis, you are expecting three states of nature: recession, steady and expansion, with probabilities of 0.2, 0.5 and 0.3 respectively. Current AAA stock price is $50, while BBB stock is $40. The following table show the analysts' prediction for the price in each state: State of Economy Probability AAA stock BBB STOCK Recession 0.2 $41 Steady 0.5 $54 $42 Expansion 0.3 $58...
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