A portfolio comprises Coke (beta of 1.5) and Wal-Mart (beta of 0.5). The amount invested in Coke is $20,000 and in Wal-Mart is $20,000. What is the beta of the portfolio?A. 0.9B. 1C. 0.95D. 1.1

Coke Beta =1.5 Wal Mart = 0.5 Coke =20,000 Wal Mart =20000

Answered: A portfolio comprises Coke (beta of…

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

Similar questions

Donald Gilmore has $100,000 invested in a 2-stock portfolio. $80,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.32 b. 1.36 c. 1.38 d. 1.40 e. 1.34
Using the table below, what is the portfolio beta? Security Security #1 Security #2 Security #3 Security #4 O 1.18 O 1.07 O 1.03 O 1.61 Amount Invested $3500 $4500 $2200 $3400 Beta 0.85 1.24 1.00 1.56
8 Consider the following monthly returns. X is a hedge portfolio. MKTRF, SML and HML are factors from the Fama and French 3-factor model. X MKTRF SML HML 0.190 0.050 0.080 0.090 0.050 0.000 0.020 -0.010 0.010 -0.030 -0.030 -0.020 0.120 0.060 0.060 0.050 0.040 0.040 0.050 0.060 0.040 0.000 0.040 0.030 0.170 0.050 0.100 0.050 0.060 0.040 0.040 0.050 0.070 0.030 0.080 0.070 0.070 0.030 0.070 0.040 0.100 0.000 0.010 0.020 0.020 0.010 0.040 0.040 Required: Using the Fama and French 3-factor model, calculate the coefficient on MKTRF for hedge portfolio X:
D4) Finance Consider a portfolio composed of shares AAA and BBB as shown in the following table. At 95% confidence level, select the correct statement AAA BBB Value 2,470,000 785,750 % investment 76% 24% Volatilities 2.32 % 2.69 % Correlation for both assets 0.65 Portfolio Value for both assets 3,255,750 a) The Component VaR of the Asset AAA is 92,223 and the component VaR of the Asset BBB is 27955.69 b) The contribution to the VaR of the Asset AAA is 77% and the one of the Asset 2 is 23% c) Both answers are correct
5
Assume that you have just received information from your investment advisor that your portfolio has reached a value of $1,250,000. Your portfolio consists of three stocks, as follows: Stock Amount Invested % of Total Beta A $250,000 20% 1.12 B $400,000 32% .85 C $600,000 48% .55 Total: $1,250,000 100% Calculate the beta of this investment portfolio. Assume that the expected market return ( r m ) is 9 percent and the expected risk- free rate ( RF ) is 2 percent. What is the expected return ( r j ) for this investment portfolio?
Consider two asset classes: Stocks and Bonds. You estimate the following parameters for these two asset class funds. correlation matrix b/n Stocks and Bonds E(r ) sd(r) Stocks Bonds Stocks 19% 28% 10.5 Bonds 10% 8% 0.5 1 Consider a $80,000 portfolio consisting of $60,000 in Stocks and $20,000 in Bonds. So, the portfolio is 75% in Stocks and 25% in Bonds. Given the expected return on the portfolio is 16.75%, and the standard deviation of the portfolio return is 22.07%, what is the 2.5% value at risk (note: the 95% confidence interval lower limit on the portfolio value is the value of the portfolio at this level of loss)? (use 2 decimals without $, so a loss of -$10.00 is -10.00) Answer:Question 2 - 21205.76 Feedback The correct answer is: -21908.92 expain
7
N1
9
A bank has estimated its VAR for its bond portfolio is $25,600 and for its stock portfolio, it is $33,600. The correlation coefficient between the two portfolios is -0.25. How much VAR would be reduced if they were allowed to aggregate the VAR of the two portfolios? A $36,800.00 B $59,200.00 C $10,400.00 D $22,400.00
Donald Gilmore has $100,000 invested in a 2-stock portfolio. $70,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.31 b. 1.36 c. 1.41 d. 1.46 e. 1.26

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

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

A portfolio comprises Coke (beta of 1.5) and Wal-Mart (beta of 0.5). The amount invested in Coke is $20,000 and in Wal-Mart is $20,000. What is the beta of the portfolio? A. 0.9 B. 1 C. 0.95 D. 1.1