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You are considering investing in assets Z and with betas of 1.2 and 1.5 respectively. The...
You construct a portfolio out of 4 assets. The betas of the assets are 1, 0.5,...
You construct a portfolio out of 4 assets. The betas of the assets are 1, 0.5, 1.9, and 0.9, and the respective weights of the assets in your portfolio are 20%, 15%, 35%, and 30%. What is the beta of your portfolio? (please round to 2 decimal places ) If the expected market return the next year is 9% and the risk-free rate is 4%, what is the expected return of your portfolio that year? (please round to the nearest...
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent...
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent in Stock R, 40 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are . 78, 87, 1.13, and 1.45, respectively. What is the portfolio beta? Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 and the total portfolio is...
Ms. A invests $400,000, $60,000, and $25,000 in stocks X, Y, and Z, respectively. The betas...
Ms. A invests $400,000, $60,000, and $25,000 in stocks X, Y, and Z, respectively. The betas of these stocks are.25, .95, and 1.63, respectively. The market's expected return is 8%, and the risk-free rate is 2%. What is the expected value of Ms. A's investment?
3. Intermountain Resources Inc. has three divisions with the following equity betas: Proportion Division Beta of...
3. Intermountain Resources Inc. has three divisions with the following equity betas: Proportion Division Beta of Assets Lumber 0.7 50% Coal 1.2 30% Tourism 20% 1.3 The risk free rate is 7% and the market risk premium is 8%. The firm's debt costs 7.6% per year. Its tax rate is 25% a) What is Intermountain's cost of equity? b) If the firm uses 40% equity and 60% debt, what is the WACC? 4. Brennan's just paid a dividend of $1.50...
Please answer and walk me through all of the questions. 1. You are considering investing in...
Please answer and
walk me through all of the questions.
1. You are considering investing in a single stock that has a 50% chance of producing a 20% return. a 25% chance of producing an 8% return, and a 25% chance of producing a-12% return, what is its expected return? Expected r Consider the range of the possible returns for this stock and draw a picture of the dispersion of possible returns. 2. Expected Return on a Portfolio Stock Wtd...
Assume you are considering investing your personal portfolio in only two possible risky assets: 60% invested...
Assume you are considering investing your personal portfolio in only two possible risky assets: 60% invested in Asset Y and the rest in Asset Z. The characteristics of these two risky assets are as follows: Asset Y has an Expected Return of 12% and a standard deviation of 15% Asset Z has an Expected Return of 9% and a standard deviation of 12% Correlation between the returns of Asset Y and Asset Z is 0.20 Find the Expected Return of...
You are considering investing in Varco plc and have decided to calculate the value of the...
You are considering investing in Varco plc and have decided to calculate the value of the company using some of the techniques you have covered in your University course. After a considerable amount of research you have decided that an appropriate risk free rate of return is 6.5% and the market rate of return is 12%. You have also found various financial web sites that have given you an average beta of 1.9. Required: a) Discuss why knowing a company’s...
4. XYZ's retirement account has $350.000 in corporate bonds, $100,000 in growth stocks and S50,000 in...
4. XYZ's retirement account has $350.000 in corporate bonds, $100,000 in growth stocks and S50,000 in 10-year treasury bonds. The expected returns for these asset classes are 5%, 20%, and 2% respectively. Also, their betas are 0.8 for the corporate bond, 2.0 for the growth stocks and 0.3 for the 10-year treasury security. a. Calculate the portfolio expected return and beta for the retirement portfolio (14 pts) b. The expected return on an asset is 7% and its beta is...
Scenario 3 Enzed Industries (LO1b & 1e) Enzed Industries is considering two assets for investing. The probability d...
Scenario 3 Enzed Industries (LO1b & 1e) Enzed Industries is considering two assets for investing. The probability distributions of expected returns for these two assets are shown in the table below. Asset X Asset Y Return r.(%) Return r.(%) 1 0.10 50 0.40 46 2 10 20 0.30 0.30 0.20 0.40 0. 20 0.10 2 0 14 5 Q3. Calculate the following for both assets and describe the degree of asset risk and return. a. Expected value of return (r)...
BETAS for company
The following table shows betas for several companies. Calculate each stock’s expected rate of return using CAPM. Assume the risk free rate of interest is 8 percent. Use a 5 Percent risk premium for the market portfolio. [4 marks] Company BetaPSO 2.4Shell 1.8Hascol 0.50 Total 0.75 a) If the expected rate of return on the market portfolio is 9 percent and T- bills yield is 5 percent, what must be the beta...
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent in Stock R, 40 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are . 78, 87, 1.13, and 1.45, respectively. What is the portfolio beta? Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 and the total portfolio is...
3. Intermountain Resources Inc. has three divisions with the following equity betas: Proportion Division Beta of Assets Lumber 0.7 50% Coal 1.2 30% Tourism 20% 1.3 The risk free rate is 7% and the market risk premium is 8%. The firm's debt costs 7.6% per year. Its tax rate is 25% a) What is Intermountain's cost of equity? b) If the firm uses 40% equity and 60% debt, what is the WACC? 4. Brennan's just paid a dividend of $1.50...
Please answer and
walk me through all of the questions.
1. You are considering investing in a single stock that has a 50% chance of producing a 20% return. a 25% chance of producing an 8% return, and a 25% chance of producing a-12% return, what is its expected return? Expected r Consider the range of the possible returns for this stock and draw a picture of the dispersion of possible returns. 2. Expected Return on a Portfolio Stock Wtd...
4. XYZ's retirement account has $350.000 in corporate bonds, $100,000 in growth stocks and S50,000 in 10-year treasury bonds. The expected returns for these asset classes are 5%, 20%, and 2% respectively. Also, their betas are 0.8 for the corporate bond, 2.0 for the growth stocks and 0.3 for the 10-year treasury security. a. Calculate the portfolio expected return and beta for the retirement portfolio (14 pts) b. The expected return on an asset is 7% and its beta is...
Scenario 3 Enzed Industries (LO1b & 1e) Enzed Industries is considering two assets for investing. The probability distributions of expected returns for these two assets are shown in the table below. Asset X Asset Y Return r.(%) Return r.(%) 1 0.10 50 0.40 46 2 10 20 0.30 0.30 0.20 0.40 0. 20 0.10 2 0 14 5 Q3. Calculate the following for both assets and describe the degree of asset risk and return. a. Expected value of return (r)...
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