Question

Work Out Problems (Show Work Legibly for Credit Round your final answer to 2 decimal places Paul McLaren holds the following portfolio: Stock 1.00 Investment Beta SI50.000 1.40 50,000 0.80 100.000 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? (5 pts) 6. A company had a quick ratio of 1.4, a current ratio of 3.0, a days sales outstanding of 36.5 days (based on a 365-day year), total current assets of 5810,000 and cash and marketable securities of S120,000. What were the company's sales? (5 pts)

Answer 1

5: Change in beta= 0.26

	Original Beta
Stock	Investment	Beta	Weights
A	150000	1.4	0.40
B	50000	0.8	0.13
C	100000	1	0.27
D	75000	1.2	0.20
Total	375000
Portfolio Beta	1.17

	New Beta
Stock	Investment	Beta	Weights
E	150000	0.75	0.40
B	50000	0.8	0.13
C	100000	1	0.27
D	75000	1.2	0.20
Total	375000
Portfolio Beta	0.91
Change	0.26

Book1- Excel AutoSave oif Sign in Comments O Tell me what you want to do File Home Formulas Review View Help Share Insert Draw Page Layout Data KInsert X A A Calibri General 11 Delete Sort & Find & Filter Select Conditional Format as Cell Paste в I U A Format BIU Formatting Table Styles Font Clipboard Alignment Number Cells Editing A Styles A1 A B C D F F G н J Original Beta New Beta 1 Beta Weights 1.4 B3/$B$7 0.8 B4/$B$7 Beta Weights 0.75 G3/$B$7 0.8 G4/$B$7 G5/$B$7 2 Stock Investment Stock Investment 3 А 150000 150000 4 B 50000 B 50000 B5/$B$7 1.2 B6/$B$7 5 C 100000 C 100000 1 75000 -SUM(B3:B6) 6 D 75000 1.2 G6/$B$7 7 Total Total =SUM(G3:G6) 8 9 Portfolio Beta =SUMPRODUCT (D3:D6,C3:C6) Portfolio Beta =SUMPRODUCT(13:16,H3: H6) Change 10 B9-G9 11 12 13 14 15 16 17 Sheet1 Sheet2 Ready e ха P3

6: Current liabilities = 810000/3 = 270000

Quick assets = 1.4*270000 = 378,000

Inventory = Current assets-quick assets = 810000-378000=432000

Receivables = Current assets – inventory-Cash and marketable securities

= 810000-432000-120000

= 258000

DSO = 365*Receivables/Sales

36.5= 365*258000/Sales

Sales = 2580000