Question
In: Accounting
You want to create a portfolio equally as risky as the market, and you have $1,100,000...
|
You want to create a portfolio equally as risky as the market, and you have $1,100,000 to invest. Consider the following information: |
| Asset | Investment | Beta |
| Stock A | $275,000 | 0.60 |
| Stock B | $220,000 | 1.25 |
| Stock C | 1.45 | |
| Risk-free asset | ||
| Required: |
| (a) | What is the investment in Stock C? (Do not round your intermediate calculations.) |
| (b) | What is the investment in risk-free asset? (Do not round your intermediate calculations.) |
Solutions
Expert Solution
| a. | Investment in stock C | = | $ 4,55,172 | |
| b. | Investment in stock Risk - free - assets | = | $ 1,49,828 | |
| Workings: | ||||
| Asset | Investment | Beta | Weight | |
| (i) | (ii) | (i)*(ii) | ||
| Stock A | $ 2,75,000 | 0.6 | $ 1,65,000 | |
| Stock B | $ 2,20,000 | 1.25 | $ 2,75,000 | |
| Stock C | X | 1.45 | 1.45 X | |
| Risk - free - assets | 0 | 0 | ||
| Total | $ 11,00,000 | 0 | ||
| $165000 + $275000 + 1.45X | ||||
| *Beta of risk - free - assets is zero | ||||
| Also | ||||
| $ 11,00,000 | = | ($165000 + $275000 + 1.45X) | ||
| 1.456 X | = | $ 6,60,000 | ||
| X | = | $ 4,55,172 | ||
| Stock C | = | $ 4,55,172 | ||
| Risk - free - assets | ||||
| Total stock value | = | $ 11,00,000 | ||
| Less: | Stock A | = | $ 2,75,000 | |
| Less: | Stock B | = | $ 2,20,000 | |
| Less: | Stock C | = | $ 4,55,172 | |
| Risk - free - assets | = | $ 1,49,828 | ||
ekkarill92 answered 1 year agoRelated Solutions
You want to create a portfolio equally as risky as the market, and you have $1,100,000...
You want to create a portfolio equally as risky as the market,
and you have $1,100,000 to invest. Consider the following
information: Asset Investment Beta Stock A $385,000 0.80 Stock B
$330,000 1.35 Stock C 1.55 Risk-free asset Required: (a) What is
the investment in Stock C? (Do not round your intermediate
calculations.) (b) What is the investment in risk-free asset? (Do
not round your intermediate calculations.)
You want to create a portfolio equally as risky as the market, and you have $1,100,000...
You want to create a portfolio equally as risky as the market,
and you have $1,100,000 to invest. Consider the following
information:
Asset
Investment
Beta
Stock A
$275,000
0.70
Stock B
$275,000
1.35
Stock C
1.55
Risk-free asset
Required:
(a)
What is the investment in Stock C? (Do not round your
intermediate calculations.)
(Click to
select) $359,807 $328,670 $345,968 $214,334 $332,129
(b)
What is the investment in risk-free asset? (Do not
round your intermediate calculations.)
(Click to
select) $212,193 $195,871 $335,666 $204,032 $193,830
You want to create a portfolio equally as risky as the market,and you have $1,000,000...
You want to create a portfolio equally as risky as the market,
and you have $1,000,000 to invest. Given this information, fill in
the rest of the following table:AssetInvestmentBetaStock A180,0000.85Stock B290,0001.40Stock C1.45Risk free-rate
You want to create a portfolio equally as risky as the market, and you have $800,000...
You want to create a portfolio equally as risky as the market,
and you have $800,000 to invest. You've already allocated a portion
of your wealth to Stock A and Stock B, and you've decided to also
invest money in Stock C and the risk-free asset. Consider the
following information:
Asset
Investment
Beta
Stock A
$200,000
0.80
Stock B
$160,000
1.30
Stock C
?
1.50
Risk-free asset
?
?
Required:
(a)
How much should you invest in Stock...
You want to create a portfolio equally as risky as the market, and you have $1,200,000...
You want to create a portfolio equally as risky as the market,
and you have $1,200,000 to invest. Consider the following
information:
AssetInvestmentBeta
Stock A$420,0000.70
Stock B$360,0001.25
Stock C 1.55
Risk-free asset
Required:
(a)What is the investment in Stock C? (Do not round your
intermediate calculations.)
(Click to
select) $279,484 $305,962 $294,194 $213,028 $282,426
(b)What is the investment in risk-free asset? (Do not round your
intermediate calculations.)
(Click to
select) $130,838 $119,516 $125,806 $206,972 $120,774
You want to create a portfolio equally as risky as the market, and you have $1,000,000...
You want to create a portfolio equally as risky as the market,
and you have $1,000,000 to invest. Consider the following
information:
Asset
Investment
Beta
Stock A
$200,000
0.85
Stock B
$350,000
1.20
Stock C
1.55
Risk-free asset
Required:
(a)
What is the investment in Stock C? (Do not round your
intermediate calculations.)
(Click to select)$275,097$253,935$264,516$251,290$144,849
(b)
What is the investment in risk-free asset? (Do not
round your intermediate calculations.)
(Click to select)$192,903$178,065$305,151$176,210$185,484
You want to create a portfolio equally as risky as the market, and you have $500,000...
You want to create a portfolio equally as risky as the market,
and you have $500,000 to invest. Information about the possible
investments is given below:
Asset
Investment
Beta
Stock A
$ 85,000
.80
Stock B
$165,000
1.15
Stock C
1.40
Risk-free asset
a.
How much will you invest in Stock C?
(Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,
32.16.)
b.
How much will you invest in...
You want to create a portfolio equally as risky as the market, and you have $1,400,000...
You want to create a portfolio equally as risky as the market,
and you have $1,400,000 to invest. Consider the following
information: Asset Investment Beta Stock A $350,000 0.75 Stock B
$280,000 1.10 Stock C 1.55 Risk-free asset Required: (a) What is
the investment in Stock C? (Do not round your intermediate
calculations.) (b) What is the investment in risk-free asset? (Do
not round your intermediate calculations.)
You want to create a portfolio equally as risky as the market, and you have $1,200,000...
You want to create a portfolio equally as risky as the market,
and you have $1,200,000 to invest. Consider the following
information:
Asset Investment Beta
Stock A $240,000 0.60
Stock B $360,000 1.25
Stock C 1.60
Risk-free asset Required:
(a) What is the investment in Stock C? (Do not round your
intermediate calculations.)
(b) What is the investment in risk-free asset? (Do not round
your intermediate calculations.)
You want to create a portfolio as risky as the market with $500,000 to invest. Fill...
You want to create a
portfolio as risky as the market with $500,000 to invest. Fill in
the following table:
Asset
Investment BETA
stock
A $85,000
0.8
stock B
$165,000 1.15
stock C
---------- 1.4
Riskfree asset _______
------
Please fill in the
blanks and show all work
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What java program would you write to solve the following problems and why does it work?...
- Using an organization with which you are familiar, identify its corporate culture and the elements of...
- It is generally accepted that patients grow anxious when a person with a white coat and...
- Write a complete program called EvenNums that uses a method to create arrays of even numbers...
- Matlab Theoretical Calculations: t = (-.00025: .00025: 100000); A1 = 29; A2 = 1.2*A1; t1 =...
- Your company will continue to sell its current product: the LifeSaver I. Your boss has asked...
- Using the factorization of wave operator, derive the D’Alembert formula.
ADVERTISEMENT