Company A's stock sells for $141 a share and has a 3-year average annual return of $29 per share. The beta value, a measure of risk, is 0.48. Company B sells for $153 a share and has a 3-year average annual return of $60 a share. The beta value is 1.22. Tori wants to spend no more than $10 comma 000 investing in these two stocks, but she wants to obtain at least $3000 in annual revenue. Tori also wants to minimize the risk, that is, the beta value. Determine how many shares of each stock Tori should buy.
Company A's stock sells for $141 a share and has a 3-year average annual return of $29 per share. The beta value, a measure of risk, is 0.48. Company B sells for $153 a share and has a 3-year average annual return of $60 a share. The beta value is 1.22. Tori wants to spend no more than $10 comma 000 investing in these two stocks, but she wants to obtain at least $3000 in annual revenue. Tori also wants to minimize the risk, that is, the beta value. Determine how many shares of each stock Tori should buy.
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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Company A's stock sells for $141 a share and has a 3-year average annual return of $29 per share. The beta value, a measure of risk, is 0.48. Company B sells for $153 a share and has a 3-year average annual return of $60 a share. The beta value is 1.22. Tori wants to spend no more than $10 comma 000 investing in these two stocks, but she wants to obtain at least $3000 in annual revenue. Tori also wants to minimize the risk, that is, the beta value. Determine how many shares of each stock Tori should buy.
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