7. Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills, 30% in stock A,and 55% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is thebeta of stock B?1.101.241.401.60 6. Which of the following should not be included in the analysis of a project?1. sunk costsII. opportunity costsIII. erosion costsIV. incremental costs *I onlyIII and IV onlyIl and IV onlyIL 1, and IV only

Portfolio beta = Weight of Treasury bill * Beta of treasury bill + Weight of stock A * Beta of stock…

7. Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills, 30% in stock A. and 55% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? : 1.10 1.24 1,40 1.60

7. Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills, 30% in stock A. and 55% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? : 1.10 1.24 1,40 1.60

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

See similar textbooks

Related questions

Q: You own a portfolio that has $ 1,750 invested in Stock A and $ 3,900 invested in Stock B. If…

A: The return on the portfolio refers to the weighted average of the return of the constituent stocks.…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: Proportion invested in Stock A, Stock B and Treasury Bills are equal that is 1/3 Beta of Stock A is…

Q: A stock has an expected return of 10.45 percent, its beta is .85, and the expected return on the…

A: To calculate the risk-free rate using the Capital Asset Pricing Model (CAPM), we can use the…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: The question is related to Portfolio Management. The beta of Portfolio is the weighted beta of all…

Q: You are investing in a portfolio consisting two shares - D and E. You plan to invest 70% of your…

A: the expected return of a portfolio is weighted average return of individual stocks or funds or…

Q: You have a portfolio that is invested 19 percent in Stock A, 32 percent in Stock B, and 49 percent…

A: Weight of stock A (WA) = 19% or 0.19Weight of stock B (WB) = 32% or 0.32Weight of stock C (WC) = 49%…

Q: Problem 3. Consider the following information about Stocks A, B and C: Amount Invested Beta A…

A: Systematic risk refers to the risk that the economy faces as a whole and it cannot be mitigated by…

Q: The beta =

A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…

Q: A $33,622 portfolio is invested in a risk-free security and two stocks. The beta of Stock A is 2.1…

A: Beta measures a stock's volatility relative to the market; a value of 1 indicates alignment with…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: Portfolio beta = Sum of ( Weight of investment * Beta of investment )

Q: •A portfolio consisting of five securities could have its beta factor computed as follows: •If the…

A: Given, Risk-Free Rate (Rf) = 12% Average Market Return (Rm) = 20% To calculate the required…

Q: Stock A: Beta is 1.30, the require return in 12.00% Stock B: Beta 0.80. If the risk free is 4.75%.…

A: To solve the question, first we need to determine the market return and then use it to determine the…

Q: The beta of four stocks-P, Q, R, and S-are respectively 0.6, 0.85, 1.2, and 1.35. Weight in P Weight…

A: Portfolio 1 Beta = (Stock P weight * Stock P Beta) + (Stock Q weight * Stock Q Beta) + (Stock R…

Q: You are investing in a portfolio consisting two shares - D and E. You plan to invest 70% of your…

A: Expected retun on a portfolio is calculated as below: It can also be calculated by calculating the…

Q: Assume that the risk-free rate is 6% and the required return on the market is 10%. What is the…

A: The formula used as follows: Required rate of return=rRF+Beta rM-rF

Q: am. 180.

A: Step 1: Identify the formula for portfolio betaβp = ∑Wβwhere:βp = portfolio betaW = Weight of the…

Q: You have $90,979 to invest in two stocks and the risk-free security. Stock A has an expected retu of…

A: Total investment = $90,979Amount investment in stock B = $26,820Expected return of stock A =…

Q: 5. Your stock portfolio consists of the following investments: Company A B C Investment A. 1.73 B.…

A: Portfolio risk can be calculated as the measure of standard deviation of the return or the square…

Q: a. You manage a risky portfolio with E(r) =18% and σ = 28%. The T-Bill rate is 8%. Your client…

A: Expected return = weight of risk portfolio *return of risky portfolio + weight of tbill * risk free…

Q: You own a portfolio consisting of the following stocks. Calculate the expected return of the…

A: Portfolio beta is a measure of the systematic risk of a portfolio of investments, which reflects the…

Q: (Expected rate of return using CAPM) a. Compute the expected rate of return for Acer common stock,…

A: CAPM is a financial model used to determine the expected rate of return on investment, particularly…

Q: 2. Consider a portfolio of three stocks. The weights of the three stocks are 0.2, 0.3, and 0.5. The…

A: The Capital Asset Pricing Model is a model that describes the relationship between the expected…

Q: Suppose we have two risky assets, Stock I and Stock J, and a risk-free asset. Stock I has an…

A: Given:

Q: [Questions 15-16] The stock is expected to pay a dividend of $0.8 per share in year 1. Since then,…

A: beta = b = 1.5 Risk free rate = rf = 2% market risk premium = mrp = 6%

Q: a. Compute the expected rate of return for Intel common stock, which has a 1.1 beta. The risk-free…

A: Cost of equity(Ke) is the return expected by the holders of common stock, they are paid an…

Q: Suppose that the CAPM is a good model of risk in the stock market. Suppose also that the average…

A: Excess return on stocks = 10%Risk-free rate = 1%

Q: Question: You are an investment advisor. You currently own two stocks, A and B, with the following…

A: Calculation for Stock X:

Q: A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is…

A: As per CAPM formula Expected return on stock = Risk free return + Beta*(Market return-Risk free…

Q: The stock of AlphaFish has a beta equal to 1.28. If U.S. T-bills return 5% and the market risk…

A: Following details are given to us in the question for AlphaFish : Beta (B) = 1.28 U.S. T-bills…

Q: An investor plans to invest funds in the following stocks: Stock Beta Amount Invested A 1.39…

A: Beta of an asset measures the sensitivity of the asset in relation to the change in the market…

Q: You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5…

A: Number of Stock = n = 5 Betas = 0.75, -1.2, 0.90, 1.3 and 1.5Risk free rate = rf = 4%Market Return…

Q: The following are estimates for two stocks.. Stock Expected Return A B 0.16 0.24 Beta 0.77 1.33…

A: It is given that: Stock Proportion Expected rate Beta Firm specific Std dev A 0.32…

Q: 22. Your portfolio has a beta of 1.42. The portfolio consists of 15% US T bills, 30% Stock A, 55% in…

A: The beta of a portfolio is the weighted sum of the individual asset betas.

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: We need to use portfolio beta equation below Portfolio beta =Weight of stock A*Beta of stock A…

Q: 4m

A: CAPM shows the relationship between the expected return, the market return, the risk-free return,…

Question

7. Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills, 30% in stock A,
and 55% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the
beta of stock B?
1.10
1.24
1.40
1.60

6. Which of the following should not be included in the analysis of a project?
1. sunk costs
II. opportunity costs
III. erosion costs
IV. incremental costs *
I only
III and IV only
Il and IV only
IL 1, and IV only

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Formula

Calculation

Calculation

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

1. The following table presents the expected returns of three stocks and the risk free rate. в 4% Stock A 8% Expected return What is the expected return and risk on an equally weighted portfolio composed of these four assets? The standard deviation of stock A is 10% and the covariance between A and B equals 0.0045. The correlation matrix between A, B and C is: 14% 4% Correl B A 1 0.3 0.7 B 0.3 0.5 0.5 Combining stocks A and C in a portfolio in equal proportions will result in a variance of 1.95%. 0.7
The risk-free rate is 4%. The market risk-premium is 7%. The beta is 20. What is the expected rate of return on this stock? Answers: A.10% B12% C.18% D.20% E. 22
You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 0.87 and the beta of the portfolio is 0.92, what does the beta of stock B have to be?
Suppose you deposit $50 at the beginningof every month in a bank account that earns1% interest per month. How many monthwill it take before you have $4175.00 inyour account?
Suppose the expected return on the market is 10 percent and the risk-free rate is 5 percent. Solomon Inc. stock has a beta of 1.4. What is the expected return on the Solomon stock? Question 9 options: A) 12.8% B) 19.3% C) 12.0% D) 7.8%
You own a portfolio that has a total value of $250,000 and it is invested in Stock D with a beta of 79 and Stock E with a beta of 1.46. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D? $78,358.21 $58,768.85 O $39,179.50 O $68.563.43 O $171,641.79
5. The following data is given about stocks A, B, and C. You have a portfolio with an expected return of 15%. What is the standard deviation of the portfolio if 30% of the total investment is in Stock E? Retum and Risk Retum Correlations A. E[r] 25% Stock 50% 1.00 0.40 0.20 A B. 15% 40% 0.40 1.00 -0.50 5% 30% -0.20 -0.50 1.00
a. Compute the expected rate of return for Intel common stock, which has a 1.5 beta. The risk-free rate is 4 percent and the market portfolio (composed of New York Stock Exchange stocks) has an expected return of 14 percent. b. Why is the rate you computed the expected rate?
Your portfolio has a beta of 1.57. The portfolio consists of 16 percent U.S. Treasury bills, 35 percent Stock A, and 49 percent Stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of Stock B?
D3)
5 Assume the historical volatility of a stock on the S&P 500 is 50% and the correlation between the returns of stock is 30% A. What is the average variance of stocks on the S&P? B. What is the average covariance of the stocks? C. Consider a portfolio of S&P stocks. What is the estimated volatility of the portfolio when there 10 stocks in the portfolio? What about 20 stocks in the portfolio?
Suppose you bought $48,000 worth of stock A and $80,000 worth of stock B. The standard deviation of returns is 59% for stock A and 27% for stock B. The two stocks' returns have a correlation of 0.2. What is the standard deviation of this portfolio's returns? a. 15.2% b. 18.6% c. 23.6% O d. 26.9% O e. 30.4% QUESTION 10

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS