Question

In: Finance

(Dont round past 6 decimals) Problem THREE Using the following information: Investment Amount Beta SeaSide Inn...

(Dont round past 6 decimals)

Problem THREE

Using the following information:

Investment	Amount	Beta
SeaSide Inn	$ 110,000	1.25
Sand Ventures	$ 75,000	2.3
Sky Coaster	$ 35,000	1.7

CALCULATE:

Portfolio BETA

Part Two

Using the following information:

	2015	2016	2017	2018	2019

MARKET	8.2	<13.4>	15.1	32.5	13.7
STOCK W	<10.1>	<15.5>	5.8	10.75	17.5

CALCULATE:

Beta (slope)

Alpha (intercept)

CORR (correlation)

(Goodness of Fit)

ANSWER:

How much of the return on STOCK W is explained by the return on the MARKET?

Expert Solution

Problem THREE

Portfolio Beta can be calculated by multiplying the weights of the portfolio of each individual stock by the stock's beta and then adding the sum of the weighted stocks' betas

So the Portfolio Beta = 1.68

Part Two

Beta can be calculated by usings SLOPE function in excle.

Similarly Alpha can be calculated using INTERCEPT function in excle

So Beta = 0.35

Alpha = -3.67

Correlation can be calculated by using the function CORREL in excel

jeff jeffy answered 1 year ago

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