11. XYZ Fund has $150,000 invested in a 2-stock portfolio. $65,000 isinvested in Stock X and the remainder is invested in Stock Y. X's beta is1.50 and Y's beta is 0.70. What is the portfolio's beta? *O a) 1.2O b) 1.02O c) 1.046O d) 1.46O e) None of the above12. Suppose you held a diversified portfolio consisting of 10 differentcommon stocks, investing $500 in each stock. The portfolio's beta is 1.9.Now suppose you decided to sell one of the stocks in your portfolio with abeta of 0.8 for $500 and use the proceeds to buy another stock with abeta of 1.25. What would your portfolio's new beta be?"O a) 3.865O b) 1.074O c) 2.025O d) 4.2

Note : As per the guidelines, only first question will be answered. Kindly post the remaining…

Answered: d in Stock X and the remainde d Y's…

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d in Stock X and the remainde d Y's beta is 0.70. What is the

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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Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

Question

11. XYZ Fund has $150,000 invested in a 2-stock portfolio. $65,000 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? *
O a) 1.2
O b) 1.02
O c) 1.046
O d) 1.46
O e) None of the above
12. Suppose you held a diversified portfolio consisting of 10 different
common stocks, investing $500 in each stock. The portfolio's beta is 1.9.
Now suppose you decided to sell one of the stocks in your portfolio with a
beta of 0.8 for $500 and use the proceeds to buy another stock with a
beta of 1.25. What would your portfolio's new beta be?"
O a) 3.865
O b) 1.074
O c) 2.025
O d) 4.2

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