An investor holds a diversified portfolio with a beta equal to 1.2, consisting of a P1,000 investment in each of 10 differentcommon stocks. He sold one of your stocks that has a beta equal to 0.7 for P1,000. The whole proceeds was usedto purchase another stock that has a beta equal to 1.4. Determine the beta of the new portfolio?а.1.21b.1.27C.1.32е.1.33 Eraser Corp. has an investment fund amounting to P3,000,000. The fund consist of three stocks as follows:StockInvestmentBetaPAL1,000,0002.3JFC500,0001.2СЕВ500,0001.1DITO1,000,0001The market required rate of return is 10% while the risk-free rate is 3%1. What is the portfolio beta?а.1.48b. 1.70С.1.95d. 2.102. What is the market Risk Premium?а.3%b. 7%С.10%d. 13%3. What is the required rate of return of the portfolio?а. 12.52b. 13.36C.14.80d. 15.20

Beta of portfolio is weighted average beta of all stocks in the portfolio.

Answered: stor holds a diversified portfolio with…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor holds a diversified portfolio with a beta equal to 1.5, consisting of a P100 investment ineach of 10 different common stocks. He sold one of your stocks that has a beta equal to 0.5 for P100.The whole proceeds were used to purchase another stock that has a beta equal to 1. Determine thebeta of the new portfolio?
You hold a diversified portfolio consisting of a $5,542 invested in each of 5 different common stocks. The portfolio beta is equal to 1.47. You have decided to sell one of your stocks that has a beta equal to 1.4 for $5,542. You plan to use the proceeds to purchase another stock that has a beta equal to 0.9. What will be the beta of the new portfolio? 1.37 O 1.27 O 1.47 O 1.17 O 1.07
An investor holds a diversified portfolio consisting of a P2,100 investment in each of 10 different common stocks. The portfolio beta is equal to 1.5. You have decided to sell one of your stocks, whose beta is equal to 1, for P2,100 and used the proceeds to buy different P2,100 of stock of a retail company whose beta is 1.2. What will be the new beta of the portfolio? (No rounding off until the final answer)
Assuming you are investing 50% in A and 50% in B, what will be the portfolio risk and returns The possible returns and associated probabilities of two shares, A and B SHARE A SHARE B PA RA (%) PB RB (%) 0.05 10 0.05 12 0.25 15 0.25 18 0.40 22 0.40 28 0.25 25 0.25 32 0.05 30 0.05 38 1.00 1.00
Assuming you are investing 50% in A and 50% in B, The possible returns and associated probabilities of two shares, A and B SHARE A SHARE B PA RA (%) PB RB (%) 0.05 10 0.05 12 0.25 15 0.25 18 0.40 22 0.40 28 0.25 25 0.25 32 0.05 30 0.05 38 1.00 1.00 Required what will be the portfolio risk and returns
You have a portfolio worth $75,000 consisting of 15 stocks with $5,000 invested in each. The portfolio's beta is 1.20. You plan to sell a stock with a beta of 0.8 and use the proceeds to buy a new stock with a beta of 1.6. What will the beta of the new portfolio? a. 1.25 Ob.2.0 c. 1.58 d. 1.42
Suppose you hold a diversified portfolio consisting of a $7,500 investment in eachof 20 different common stocks. The portfolio beta is equal to 1.12. Now, supposeyou have decided to sell one of the stocks in your portfolio with a beta equal to 1.0for $7,500 and to use these proceeds to buy another stock for your portfolio.Assume the new stock’s beta is equal to 1.75. Calculate your portfolio’s new beta.
If you hold a portfolio made up of the following stocks: Investment Value Beta Stock X $4,000 1.5 Stock Y $5,000 1.0 Stock Z $1,000 .5 What is the beta of the portfolio? A. 1.00 B. 1.24 C. 1.33 D. 1.15
Mike Flannery holds the following portfolio: What is the portfolio's beta? Do not round your intermediate calculations.Stock Investment BetaA $150,000 1.40B $20,000 0.80C $130,000 1.00D $75,000 1.20Total $375,000 Question 6Select one: a. 1.02 b. 1.05 c. 1.28 d. 1.19 e. 1.43
You hold a diversified $100, 000 portfolio consisting of 20 stocks with $5,000 invested in each. The portfolio's beta is 1.12. You plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.50. What will the portfolio's new beta be? Do not round your intermediate calculations. a. 1.500 b. 1.310 c 1.195 d. 1.165 e. 1.150 .
Qn4: Assume a two-stock portfolio created with $50,000 is invested in both HT and Collections. The expected returns are given below: Calculate the portfolio's return for each state of economy and fill them in the last column, under "Portfolio" (Hint: The portfolio's expected return is a weighted average of the returns of the portfolio's component assets). Calculate the portfolio's expected return (Hint: You have to incorporate the probability distribution of each state of economy). Calculate the portfolio's standard deviation. Economy Recession Below average Average Above average Boom Prob. HT 0.1 -27.0% 0.2 -7.0% 0.4 15.0% 0.2 30.0% 0.1 45.0% Coll 27.0% 13.0% 0.0% -11.0% -21.0% Portfolio
Please answer part A-D and include a short explanation for each part of how you arrived at your answer. A) If a stock has a beta coefficient, b, equal to 2.2, the risk premium associated with the market is 9 percent, and the risk-free rate is 8.8 percent, application of the capital asset pricing model indicates the appropriate return should be: B) Steve Brickson currently has an investment portfolio that contains four stocks with a total value equal to $80,000. The portfolio has a beta (b) equal to 2.3. Steve wants to invest an additional $20,000 in a stock that has b = 4.5. After Steve adds the new stock to his portfolio, what will be the portfolio's beta? C) You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 2.2. You have decided to sell one of your stocks, a lead mining stock whose b =1.8, for $5,000 net and to use the proceeds to buy $5,000 of stock in a steel company whose b =3.7. What will be…

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