Question
In: Finance
You are putting together a portfolio made up of four different stocks. However, you are...
You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:
| Portfolio Weightings | |||
| Asset | Beta | First Portfolio | Second Portfolio |
| A | 2.5 | 10% | 40% |
| B | 1 | 10% | 40% |
| C | 0.5 | 40% | 10% |
| D | -1.5 | 40% | 10% |
1. What is the beta on each portfolio? and which portfolio is riskier?
2. If the risk-free rate of interest were 4 percent and the market risk premium were 5 percent, what rate of return would you expect to earn from each of the portfolios?
Solutions
Expert Solution
calculations-
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jeff jeffy answered 3 years agoRelated Solutions
You are putting together a portfolio made up of four different stocks. However, you are...
You are putting together a portfolio made up of four different
stocks. However, you are considering two possible
weightings: CHART BELOW
a. What is the beta on each portfolio?
b. Which portfolio is riskier?
c. If the risk-free rate of interest were 5 percent and the
market risk premium were 7.5 percent, what rate of return would
you expect to earn from each of the portfolios?
Portfolio Weightings
Asset
Beta
First Portfolio
Second Portfolio
A
2.40
12%
38%
B...
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Beta
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3.09
DEF
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0.63
GHI
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1.54
JKL
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1.81
The 25 - year government of Canada
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What is the portfolio beta?
What is the expected return of each security?
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construct an international portfolio with zero risk. Compute the
expected return on such a portfolio.
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