Question
In: Finance
Jill Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875....
Jill Angel holds a $200,000 portfolio consisting of the
following stocks. The portfolio's beta is 0.875.
| Stock | Investment | Beta | ||
| A | $50,000 | 0.50 | ||
| B | $50,000 | 0.80 | ||
| C | $50,000 | 1.00 | ||
| D | $50,000 | 1.20 | ||
| Total | $200,000 |
If Jill replaces Stock A with another stock, E, which has a beta of 1.60, what will the portfolio's new beta be?
a. 1.10
b. 0.85
c. 1.35
d. 1.30
e. 1.15
Solutions
Expert Solution
Ans e. 1.15
| Stock | INVESTMENT (i) | Beta (ii) | Investment* Beta (i)* (ii) |
| E | 50,000 | 1.60 | 80,000.00 |
| B | 50,000 | 0.80 | 40,000.00 |
| C | 50,000 | 1.00 | 50,000.00 |
| D | 50,000 | 1.20 | 60,000.00 |
| Total | 2,00,000 | 2,30,000 | |
| AVERAGE BETA = | (INVESTMENT * BETA) / TOTAL INVESMENT | ||
| 230000 / 200000 | |||
| 1.15 | |||
jeff jeffy answered 1 year agoRelated Solutions
Ally holds a RM200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875. Stok...
Ally holds a RM200,000
portfolio consisting of the following
stocks. The portfolio's beta is 0.875.
Stok
[Stock] Pelaburan
[Investment] (RM) Beta
A 50,000 0.50
B 50,000 0.80
C 50,000 1.00
D 50,000 1.20
Total 200,000
1. If Ally replaces Stock A
with another stock E, which has a beta of 1.50, what will the
portfolio's new beta be?
2. Company A has a beta of
0.70, while Company B's beta is 1.20. The required return on the
stock market is...
Ally holds a RM200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875. Stok...
Ally holds a RM200,000
portfolio consisting of the following
stocks. The portfolio's beta is 0.875.
Stok [Stock] ----------
Pelaburan [Investment] (RM)
--------- Beta
A------------------- 50,000 ------------------------ 0.50
B ------------------- 50,000 ------------------------ 0.80
C ------------------- 50,000 ------------------------ 1.00
D ------------------- 50,000 ------------------------ 1.20
Total ----------------- 200,000
1. If Ally replaces Stock A with another stock E, which
has a beta of 1.50, what will the portfolio's new beta
be?
2. Company A has a beta of 0.70, while Company B's beta...
You own a portfolio consisting of the following stocks:
You own a portfolio consisting of the following stocks:
Stock % of Portfolio Beta Historical Return Required Return
1 13% 1.15 .11
2 44% 0.95 .08
3 19% 1.60 .14
4 24% 1.30 .12
The risk-free rate is 5% and the expected market return is 10%.
a. Calculate the required return for each stock.
b. Calculate the historical return on the portfolio.
c. Calculate the portfolio beta.
d. Calculate the required return...
which of the following statements is correct? A. the beta of a portfolio of stocks is...
which of the following statements is correct?
A. the beta of a portfolio of stocks is always smaller than the
betas of any of the individual stocks
B. If you found a stock with a zero historical beta and held it
as the only stock in your portfolio, you would, by definition, have
a riskless portfolio
C. The beta coefficient of a stock is normally found by
regressing past returns on a stock against past market returns. One
could also...
Consider a portfolio consisting of the following three stocks: Portfolio Weight Volatility Correlation with Market Portfolio...
Consider a portfolio consisting of the following three
stocks:
Portfolio Weight
Volatility
Correlation with Market Portfolio
HEC Corp
0.26
13%
0.35
Green Midget
0.29
28%
0.52
Alive And Well
0.45
11%
0.54
The volatility of the market portfolio is 10% and it has an
expected return of 8%. The risk-free
rate is 3%.
Compute the beta and expected return of each stock.
Using your answer from part (a), calculate the expected return
of the portfolio.
What is the beta of...
Assume the CAPM holds. Portfolio A has a beta of 1.2. Portfolio B has a beta...
Assume the CAPM holds. Portfolio A has a beta of 1.2. Portfolio
B has a beta of 2.4. Which of the following is true? none of the
answers listed here. the return on Portfolio A is twice the return
on portfolio B. The return on Portfolio B is twice the return on
Portfolio A. the return on Portfolio A is half the return on
portfolio B. 10 points
If a portfolio holds three stocks in equal amounts, and the betas of the three stocks...
If a portfolio holds three stocks in equal amounts, and the
betas of the three stocks are 0, 0.5, and 1.1, what is the beta of
the portfolio?
The following table contains the historic returns from a portfolio consisting of large stocks and a...
The following table contains the historic returns from a
portfolio consisting of large stocks and a portfolio consisting of
long-term Treasury bonds over the last 20 years. T-bills returns
represent risk-free returns. Analyze the risk-return trade-off that
would have characterized these portfolios. The following dataset is
also available in Excel format in Module 3 Resources on Canvas.
Returns in the dataset are in percents. For example, 31.33 means
31.33% per year.
Year
Large Stock
Long-Term
T-Bonds
T-Bills
1997
31.33
11.312...
The following table contains the historic returns from a portfolio consisting of large stocks and a...
The following table contains the historic returns from a
portfolio consisting of large stocks and a portfolio consisting of
long-term Treasury bonds over the last 20 years. T-bills returns
represent risk-free returns. Analyze the risk-return trade-off that
would have characterized these portfolios. The following dataset is
also available in Excel format in Module 3 Resources on Canvas.
Returns in the dataset are in percents. For example, 31.33 means
31.33% per year.
Year
Large Stock
Long-Term
T-Bonds
T-Bills
1997
31.33
11.312...
A portfolio consists of the following four stocks. The dollar investment and beta on each of...
A portfolio consists of the following four stocks. The dollar
investment and beta on each of the stocks are listed below:
Stock
Investment
Beta
A
$200,000
0.5
B
$800,000
0.8
C
$1,500,000
1.5
D
$2,500,000
-0.25
If the expected return on the market is 11% and the risk-free rate
is 4%, what is the portfolio’s required rate of return?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- JAVA If a user inputs a specific number of rows, columns and sections for a rectangle...
- A stock costs $80 and pays a $4 dividend each year for three years. a) If...
- A solid cylinder, mass of 15 kg, is on a hill that is inclined at a...
- Discuss the difference between a)FAT, FAT32, NTFS, CDFS, etc., b)What make them diferent and why they...
- 2. Given the Instruction sets for Machine-1, Machine-2 and Machine-3, write programs to calculate: P= ((B×C)...
- Problem III. Suppose that, in a market of a certain good, there are firms that are...
- discusses the difference between public relations and advertising. Cite an organization or individual and give one...
ADVERTISEMENT