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?

Solutions

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

Next > < Previous

Related Solutions

Use the following information for questions 16-17. Round all calculations to the two decimals. Uptown Inc....

Use the following information for questions 16-17. Round all calculations to the two decimals. Uptown Inc. entered into an arrangement on January 1, 2017 to lease a machine for four years with lease payments of $85,000 each year with the first payment due immediately and January 1 of each year thereafter. There are no options to extend, terminate, or renew the lease. The lessor requires a return on its leases of this type of 8%, which is the same as...

Problem 6 Part a) Given the following information, what is the amount of: i) the direct...

Problem 6 Part a) Given the following information, what is the amount of: i) the direct materials cost variance and ii) the direct materials efficiency variance? Actual direct materials cost = $1.00 per pound Standard direct materials cost = $1.10 per pound Actual quantity purchased and used = 2,000 pounds Standard quantity that should have been used = 1,800 pounds _________________________ _________________________ Part b) Given the following information, what is the amount of: i) the direct labor cost variance and...

Kelly has investments with the following characteristics in her portfolio: Investment In Beta Amount Invested Stock...

Kelly has investments with the following characteristics in her portfolio: Investment In Beta Amount Invested Stock Q 1.2 $10,000 Stock R 2.1 $20,000 Stock S 0.89 $20,000 Given the risk free rate of 3% and the market return of 8%, what is the expected rate of return of Kelly’s investment portfolio?

You are estimating the beta of the stock of Calico,Inc. using historical return information. The following...

You are estimating the beta of the stock of Calico,Inc. using historical return information. The following information is available: Historical return %: Year Calico,Inc. Viprot, inc. LCK Index ( Market proxy) 2009 28 24 18 2008 18 -20 15 2007 15 18 22 2006 13 15 19 2005 -6 -8 -12 2004 24 15 36 2003 -20 -18 -28 2002 -8 -6 -13 Using the historical return data and simple linear regression ( may use calculator, showing calculator entries or...

Portfolio Beta Problem THIS ALL THE INFORMATION THAT I HAVE. Please answer the following questions related...

Portfolio Beta Problem THIS ALL THE INFORMATION THAT I HAVE. Please answer the following questions related to a Portfolio of stocks consisting of the stocks of the Dow 30 (assume an equal investment in each stock - perhaps $1000 investment for each). 1.) Calculate the beta of this portfolio of stocks using the current betas for each stock as given on Yahoo Finance or CNBC. What does this portfolio beta measure? 2.) What should the owner of this portfolio expect in...

Complete the following balance sheet using the information given. Round account balances to the nearest dollar....

Complete the following balance sheet using the information given. Round account balances to the nearest dollar. Balance Sheet Income Statement Cash Sales (All Credit) $40,000 Accounts receivable Cost of goods sold 20,000 Inventory Operating expenses 12,000 Net fixed assets Interest expense 200 Total assets Taxes 2 730 Net income $5,070 Accounts payable Short-term notes payable $1,425 Ratios: Long-term debt Profit Margin = 12.675% Common stock $5,000 Return on Equity = 15% Retained earnings Quick Ratio = 1.2 Total Liabilities and...

6) Which of the following is a problem when using the CAPM to estimate the cost...

6) Which of the following is a problem when using the CAPM to estimate the cost of capital for equity? A. The risk-free rate of return fluctuates. B. The market return fluctuates. C. The beta fluctuates. D. The beta is calculated using historical data. 7) You are trying to determine the appropriate price to pay for a share of common stock. If you purchase this stock, you plan to hold it for 1 year. At the end of the year...

. Given the following information obtained from three normally distributed populations, construct an ANOVA table. (Round...

. Given the following information obtained from three normally distributed populations, construct an ANOVA table. (Round intermediate calculations to at least 4 decimal places. Round "SS" to 2 decimal places, "MS" to 4 decimal places, and "F" to 3 decimal places.) SSTR = 286.3; SSE = 2,785.8; c = 3; n1 = n2 = n3 = 10 b. At the 5% significance level, what is the conclusion to the ANOVA test of mean differences? Do not reject H0; we cannot...

a. Given the following information obtained from three normally distributed populations, construct an ANOVA table. (Round...

a. Given the following information obtained from three normally distributed populations, construct an ANOVA table. (Round intermediate calculations to at least 4 decimal places. Round "SS" to 2 decimal places, "MS" to 4 decimal places, and "F" to 3 decimal places.) SSTR = 251.3; SSE = 2,449.5; c = 3; n1 = n2 = n3 = 10 b. At the 10% significance level, what is the conclusion to the ANOVA test of mean differences? Do not reject H0; we cannot...

Forecast the balance sheet for Lambert Co. using the following projected information ($000). Round all projections...

Forecast the balance sheet for Lambert Co. using the following projected information ($000). Round all projections to the nearest thousand dollars. Sales $10000 Cash $500 Accruals $50 Gross Margin 45% Inventory Turns (based on COGS) 7.0 Total Asset Turnover 1.25 Current Ratio 2.0 Debt: Equity 1:3 ACP 42 days Assets Liabilities Cash ? A/P ? A/R ? Accruals ? Inventory ? C/L ? C/A ? Debt ? Net F/A ? Equity ? Total Assets ? Total L&E ?

Subjects