An investor holds a diversified portfolio with a beta equal to 1.5, consisting of a P100 investment in each 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 the beta of the new portfolio?

An investor holds a diversified portfolio with a beta equal to 1.5, consisting of a P100 investment in each 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 the beta of the new portfolio?

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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Your portfolio consists of 85 shares of CSH and 50 shares of EJH, which you just bought at $19.84 and $28.74 per share, respectively. a. What fraction of your portfolio is invested in CSH? In EJH? b. If CSH increases to $22.28 and EJH decreases to $26.28, what is the return on your portfolio? a. What fraction of your portfolio is invested in CSH? In EJH? The fraction invested in CSH is %. (Round to two decimal places.) ...
son.1
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
An investor aims to build a portfolio with annual return equal to 8.88%. In the market only two stocks (A and B) are available, with annual historical returns equal to 9.6% and 7.8% respectively. Assume future returns have the same distribution of past returns. What is the percentage of funds that the investor must allocate to the stock A and B?
An investor has $1000 initial wealth for investment and he borrows another $500 at the risk free rate. He then invest the entire total amount of $1500 in the market portfolio. What is his portfolio beta?
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Suppose you held a diversified portfolio consisting of a $7,500 investmentin each of 20 different common stocks. The portfolio’s beta is 1.25. Now suppose you decided tosell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buyanother stock with a beta of 0.80. What would your portfolio’s new beta be?
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An Investor has $100,000 invested in a 2-stock portfolio. $50,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.35 and Y’s beta is 1.50. What is the portfolio's beta?
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You own a portfolio that has $7,806 invested in Stock A and $9,747 invested in Stock B. If the expected returns on these stocks are -0.13 and 0.23, respectively, what is the expected return on the portfolio? Enter the answer with 4 decimals (e.g. 0.1234).

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