Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 4P
Suppose all possible investment opportunities in the world are limited to the five stocks listed in the table below. What does the market portfolio consist of (what are the portfolio weights)?
| Stock | Price/Share ($) | Number of Shares Outstanding (millions) |
| A | 10 | 10 |
| B | 20 | 12 |
| C | 8 | 3 |
| D | 50 | 1 |
| E | 45 | 20 |
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Students have asked these similar questions
Suppose all possible investment opportunities in the world are limited to the five stocks listed in the following table. What are the market portfolio weights? (Click on
the following icon O in order to copy its contents into a spreadsheet.)
Number of Shares Outstanding
(millions)
Stock
Price/Share
($)
A
8.43
10
В
19.15
12
C
5.94
46.68
1
E
42.87
.....
Enter the percentage that each stock makes up of the total portfolio: (Round to two decimal places.)
Stock
% of Total (portfolio weight)
A
%
В
%
E
%
20
Question 1 Consider the three stocks in the following table. P, represents price at time
t, and Qt represents shares outstanding at time t.
Po Qo P₁ Q₁
50 100 60 100
A
IB 30 200 24 200
C 20 200 30 200
a. Calculate the rate of return on a price-weighted index of the three stocks
b. Calculate the rate of return on a market value-weighted index of the three stocks
1. Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares
outstanding at time t. Calculate the rates of return on the following indexes of the three stocks:
A
B
с
Po
90
50
100
a. A market-value-weighted index.
b. An equally weighted index.
Qo
100
200
200
P₁
95
45
110
Q₁
100
200
200
Chapter 12 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 12.1 - According to the CAPM, we can determine the cost...Ch. 12.1 - What inputs do we need to estimate a firms equity...Ch. 12.2 - How do you determine the weight of a stock in the...Ch. 12.2 - Prob. 2CCCh. 12.2 - Prob. 3CCCh. 12.3 - How can you estimate a stocks beta from historical...Ch. 12.3 - How do we define a stocks alpha, and what is its...Ch. 12.4 - Why does the yield to maturity of a firms debt...Ch. 12.4 - Prob. 2CCCh. 12.5 - What data can we use to estimate the beta of a...
Ch. 12.5 - Prob. 2CCCh. 12.6 - Why might projects within the same firm have...Ch. 12.6 - Under what conditions can we evaluate a project...Ch. 12.7 - Prob. 1CCCh. 12.7 - Prob. 2CCCh. 12 - Prob. 1PCh. 12 - Suppose the market portfolio has an expected...Ch. 12 - Prob. 3PCh. 12 - Suppose all possible investment opportunities in...Ch. 12 - Using the data in Problem 4, suppose you are...Ch. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Suppose that in place of the SP 500, you wanted to...Ch. 12 - Prob. 9PCh. 12 - You need to estimate the equity cost or capital...Ch. 12 - In mid-2012, Ralston Purina had AA-rated, 10-year...Ch. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Your firm is planning to invest in an automated...Ch. 12 - Consider the setting of Problem 18. You decided to...Ch. 12 - Prob. 20PCh. 12 - In mid-2015, Cisco Systems had a market...Ch. 12 - Weston Enterprises is an all-equity firm with two...Ch. 12 - Prob. 24PCh. 12 - Your company operates a steel plant. On average,...Ch. 12 - Prob. 26PCh. 12 - You would like to estimate the weighted average...
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