Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the processof buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 22.5% and abeta of 1.20. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be afterthe purchase of the Alpha stock? Do not round your intermediate calculations.11.42%; 1.0411.54%; 1.2615.07%; 1.33O12.15%; 1.2013.97%; 0.97

The calculations are: Value of Alpha stocks = 1000 shares * $10 per share= $10,000New value of the…

Answered: Assume that you hold a well-diversified…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 25P

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You are an investor in common stock, and you currently hold a well-diversified portfolio which has an expected return of 12 percent, a beta of 1.2, and a total value of $9,000. You plan to increase your portfolio by buying 100 shares of AT&E at $10 a share. AT&E has an expected return of 20 percent with a beta of 2.0. What will be the expected return and the beta of your portfolio after you purchase the new stock? Group of answer choices ~r(sub p) = 20.0%; βp = 2.00 ~r(sub p) = 12.8%; βp = 1.28 ~r(sub p) = 12.0%; βp = 1.20 ~r(sub p) = 13.2%; βp = 1.40 ~r(sub p) = 14.0%; βp = 1.32
You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.5. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 2.2. What will the portfolio's new beta be after these transactions? Do not round intermediate calculations. Round your answer to two decimal places.
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You have a $2 million portfolio consisting of a $100,000 investment in eachof 20 different stocks. The portfolio has a beta of 1.1. You are consideringselling $100,000 worth of one stock with a beta of 0.9 and using the proceedsto purchase another stock with a beta of 1.4. What will the portfolio’s newbeta be after these transactions?
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You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 24% .Suppose Stock X has an expected return of 18% and beta of 1.4, and Stock Y has an expected return of 12% and beta of 0.8 %. 1. How much money will you invest in Stock Y? 2. What is the beta of your portfolio?
Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.30. Now suppose you decided to sell one of your stocks that has a beta of 0.80 and to use the proceeds to buy a replacement stock with a beta of 1.60. What would the portfolio's new beta be? Do not round your intermediate calculations. Round your final answer to 2 decimal places. a. 1.70 b. 1.34 c. 2.10 d. 1.60
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