Dontrell Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 1.225. Stock Investment A $50,000 B $50,000 с $50,000 D $50,000 Total $200,000 If Dontrell replaces Stock A with another stock, E, which has a beta of 1.35, what will the portfolio's new beta be? Do not round your intermediate calculations. O a. 1.5625 O b. 1.8000 O c. 1.2500 O d. 1.3909 Oe. 1.4125 Beta 0.60 1.80 1.10 1.40
Dontrell Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 1.225. Stock Investment A $50,000 B $50,000 с $50,000 D $50,000 Total $200,000 If Dontrell replaces Stock A with another stock, E, which has a beta of 1.35, what will the portfolio's new beta be? Do not round your intermediate calculations. O a. 1.5625 O b. 1.8000 O c. 1.2500 O d. 1.3909 Oe. 1.4125 Beta 0.60 1.80 1.10 1.40
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
Related questions
Question
Transcribed Image Text:Dontrell Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 1.225.
| Stock | Investment | Beta |
|-------|------------|------|
| A | $50,000 | 0.60 |
| B | $50,000 | 1.80 |
| C | $50,000 | 1.10 |
| D | $50,000 | 1.40 |
| Total | $200,000 | |
If Dontrell replaces Stock A with another stock, E, which has a beta of 1.35, what will the portfolio's new beta be? Do not round your intermediate calculations.
- a. 1.5625
- b. 1.8000
- c. 1.2500
- d. 1.3909
- e. 1.4125
Transcribed Image Text:Based on the corporate valuation model, Gray Entertainment's total corporate value is $1,075 million. The company's balance sheet shows $200 million of notes payable, $300 million of long-term debt, $50 million of preferred stock, $180 million of retained earnings, and $800 million of total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of its price per share?
- a. $27.20
- b. $21.00
- c. $29.00
- d. $23.00
- e. $13.80
Expert Solution
Step 1: Introduction:
Portfolio beta refers to the risk that is associated with the portfolio due to the proportion of each security used in a portfolio. In other words, the risk is diversified by selecting an appropriate proportion of each security in the portfolio then such risk of the portfolio is represented by portfolio beta.
Step by step
Solved in 4 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education