Ms. MoneyPenny has the following investments: Required Return 13% Portfolio Weight Beta 1.80 Stock AggressiveInv Limited SafeTech Inc. RiskNeutral Corporation 0.40 8.5 0.25 1.10 10.5 0.35 1.40 a. What is the required rate of return on the portfolio? b. What is the portfolio beta? c. MoneyPenny has decided to take less risk. She sold some of the AggressiveInv and some of RiskNeutral stocks and invested the proceeds into SafeTech Inc. stock she already hold. If the new portfolio's required return is 10% and the new portfolio's beta is 1.33, and she has $1,000,000 to invest then how much should be her investment in each stock?
Ms. MoneyPenny has the following investments: Required Return 13% Portfolio Weight Beta 1.80 Stock AggressiveInv Limited SafeTech Inc. RiskNeutral Corporation 0.40 8.5 0.25 1.10 10.5 0.35 1.40 a. What is the required rate of return on the portfolio? b. What is the portfolio beta? c. MoneyPenny has decided to take less risk. She sold some of the AggressiveInv and some of RiskNeutral stocks and invested the proceeds into SafeTech Inc. stock she already hold. If the new portfolio's required return is 10% and the new portfolio's beta is 1.33, and she has $1,000,000 to invest then how much should be her investment in each stock?
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
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Transcribed Image Text:QUESTION 4:
Ms. MoneyPenny has the following investments:
Stock
AggressiveInv Limited
SafeTech Inc.
Required Return
13%
Portfolio Weight
0.40
Beta
1.80
8.5
0.25
1.10
RiskNeutral Corporation
10.5
0.35
1.40
a. What is the required rate of return on the portfolio?
b. What is the portfolio beta?
c. MoneyPenny has decided to take less risk. She sold some of the AggressiveInv and some of
RiskNeutral stocks and invested the proceeds into SafeTech Inc. stock she already hold. If the new
portfolio's required return is 10% and the new portfolio's beta is 1.33, and she has $1,000,000 to
invest then how much should be her investment in each stock?
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