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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Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. Now, suppose you have decide to sell one of the stocks in your portfolio with a beta equal to 1.0 for 7,500 and to use these proceeds to buy another stocks for your portfolio. Assume the new stocks beta to 1.75. Calculate your portfolios new beta.
Suppose you hold a diversified portfolio consisting of a $4,000 investment in each of 14 different common stocks. The portfolio beta is 1.30. You decide to sell one of the stocks in your portfolio with a beta equal to 0.8 for $3,500 and use these proceed to buy another stock for your portfolio. Assume the new stock’s beta is equal to 1.75. Calculate your portfolio’s beta.
Suppose you hold a diversified portfolio consisting of a $7,500 investment in eachof 20 different common stocks. The portfolio beta is equal to 1.12. Now, supposeyou have decided to sell one of the stocks in your portfolio with a beta equal to 1.0for $7,500 and to use these proceeds to buy another stock for your portfolio.Assume the new stock’s beta is equal to 1.75. Calculate your portfolio’s new beta.
You hold a diversified portfolio consisting of a $15,082 invested in each of 5 different common stocks. The portfolio beta is equal to 1.13. You have decided to sell one of your stocks that has a beta equal to 0.8 for $15,082. You plan to use the proceeds to purchase another stock that has a beta equal to 1.9. What will be the beta of the new portfolio? O 1.45 O 1.75 O 1.35 O 1.65 O 1.55 27
You hold a diversified portfolio consisting of a $10,000 investment in each of 20 different common stocks (that is, your total investment is $200,000). The portfolio beta is equal to 1.2. You have decided to sell one of your stocks that has a beta equal to 0.7 for $10,000. You plan to use the proceeds to purchase another stock that has a beta equal to 1.4. What will be the beta of the new portfolio?
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
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?
An investor holds a diversified portfolio consisting of a P2,100 investment in each of 10 different common stocks. The portfolio beta is equal to 1.5. You have decided to sell one of your stocks, whose beta is equal to 1, for P2,100 and used the proceeds to buy different P2,100 of stock of a retail company whose beta is 1.2. What will be the new beta of the portfolio? (No rounding off until the final answer)
By using the formula of risk and return, find the answer:
An investor owns a portfolio that includes a risk-free asset and shares of Amazon. The risk-free rate is 4% and the expected return on Amazon stock is 21%. What is the expected return on this portfolio, assuming that the investor allocates 25% of the wealth to the risk-free asset and the rest to Amazon stock?
Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.15. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 2.00. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places.
You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its net are summarized below. Calculate the beta of the portfolio and use the capital asset pricing model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18% and that the risk-free rate is 6%. Stock A, Investment = $188,000, Beta=1.50, Stock B, Investment = $282,000, Beta =0.50, Stock C, Investment = $470,000, Beta = 1.30 Beta of the portfolio ? Expected rat of return ? %

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