Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Amount Stock Beta Invested A $6,700 1.41 B 3,000 1.23 8,500 0.79 The portfolio has less total risk than the market. The portfolio has more systematic risk than the market. The portfolio has more total risk than the market. The portfolio has same systematic risk as the market.

Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Amount Stock Beta Invested A $6,700 1.41 B 3,000 1.23 8,500 0.79 The portfolio has less total risk than the market. The portfolio has more systematic risk than the market. The portfolio has more total risk than the market. The portfolio has same systematic risk as the market.

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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Similar questions

As the number of stocks in a portfolio decrease, the portfolio's unsystematic risk will O A. increase O B. O C. D. increase 1 decrease / decrease / increasing decreasing increasing decreasing at a/an rate.
Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market: Market Return 6% 22 Aggressive Stock -3% 35 Defensive Stock 4% 12 Required: a. What are the betas of the two stocks? b. What is the expected rate of return on each stock if the two scenarios for the market return are equally likely? e. What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the defensive firm's stock if market return is equally likely to be 6% or 22% ? Also, assume a T-Bill rate of 4%.
Suppose that a mutual fund manager has a $20 million portfolio with a beta of 1.2. Also suppose that the risk free rate is 4.5% and the market risk premium is 6%. The manager expects to receive an additional $5 million, which is to be invested in a number of new stocks to add to the portfolio. After these stocks are added, the manager would like the fund's required rate of return to be 10.5%. For notation, let r represent the required return, let RF represent the risk free rate, let b represent the beta of a group of stocks, and T'm represent the market return. According to the video, which equation most closely describes the security market line (SML)? Or=TRF-bx (TM - TRF) Ⓒr=TRF+b× (™M - TRF) b ○ r = TRF + TM-TRF Or=rRF+bx (M+TRF) Hint: Recall that the manager wants the new required rate of return for the portfolio to remain at 10.5%. Using the equation you just identified, and plugging in the relevant information, yields a beta of the portfolio, after the new stocks have been added,…
You have a portfolio that is invested 23 percent in Stock A, 36 percent in Stock B, 41 percent in Stock C, and the remainder in a risk free asset. The betas of the stocks are.68, 1.23.and 1.52, respectively. What is the beta of the portfolio? O1.10 1.14 O1.22 O118 O1.38
You are exploring the use of APT in making investment choices. You have identified three factors labelled F1, F2, and F3 with corresponding risk premia RP1 = 3%, RP2 = 6%, and RP3 = 2%. A stock with ticker ABC has historically shown returns which have followed the equation: rABC=0.14+.50F1+1.20F2+.8F3+eABC What is the equilibrium rate of return for stock ABC using the APT, if the T-bill rate is 5%?
The beta coefficient A stock’s contribution to the market risk of a well-diversified portfolio is called Q1. ______risk. It can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market. Q2. Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false: Statement True False Over time, a stock with a beta of 1.0 produces a return that goes up and down with a 1:1 relationship with the return on the market. Beta measures the volatility in stock movements relative to the market. A stock that is more volatile than the market will have a beta of less than 1.0. Q1. Option 1 Unsystematic or Option 2 Relevant. Please provide true or false answers. Thank you!
Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Stock Amount Invested Beta A $6,700 1.16 B 3,000 1.23 C 8,500 0.79 Group of answer choices The portfolio has more systematic risk than the market. The portfolio has more total risk than the market. The portfolio has no systematic risk. The portfolio has same systematic risk as the market. The portfolio has less systematic risk than the market.
You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 1.27 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta
You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.23 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock beta
Assume CAPM holds. What is the correlation between an efficient portfolio and market portfolio? a. 1 b.-1 c.0 d. Not enough information Assume CAPM holds. The risk-free rate is 1% and the expected return on the portfolio is 5%. What is the expected return of a stock with a beta of 2? 70%
Vijay
If an investor that owns a portfolio with 3 stocks increases their portfolio to 30 stocks, which of the following is MOST LIKELY to happen? Select one: a. risk will increase b. risk would decrease c. Systematic risk would increase d. return would increase

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