Problem 11-27 Analyzing a Portfolio [LO 2]You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about thepossible investments is given below:AssetInvestmentStock A$ 133,000Stock B $ 147,000Stock CRisk-free assetBeta.78Investment in Stock CInvestment in risk-freeasset1.231.38How much will you invest in Stock C? How much will you invest in the risk-free asset?Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.

Beta shows the risk relative to the overall risk of the market, the beta of the portfolio depends on…

Problem 11-27 Analyzing a Portfolio [LO 2] You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Stock A $133,000 Stock B $147,000 Stock C Risk-free asset Investment Beta .78 1.23 1.38 How much will you invest in Stock C? How much will you invest in the risk-free asset? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Investment in Stock C Investment in risk-free asset

Problem 11-27 Analyzing a Portfolio [LO 2] You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Stock A $133,000 Stock B $147,000 Stock C Risk-free asset Investment Beta .78 1.23 1.38 How much will you invest in Stock C? How much will you invest in the risk-free asset? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Investment in Stock C Investment in risk-free asset

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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Years 123 45 Probability 0.1 0.2 0.35 0.2 0.15 Investment A 300 350 280 460 500 Investment B 850 560 450 680 700 Investment C 500 600 700 800 900 a) If the investor wants to invest in any two of the above investments equally, which combination of two investments you select based on the portfolio risk? Assume that the correlation between the investments is -0.75 b) From a corporate perspective is unique risk (o) or beta risk (B) the more important consideration? Does it matter?
Problem 11-23 Analyzing a Portfolio You want to create a portfolio equally as risky as the market and you have $2,000,000 to invest. Given this information, fill in the rest of the following table: (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Asset Stock A Stock B Stock C Risk-free asset $ $ 69 Investment 400,000 320,000 CONJU Beta 1.20 1.50 1.60
8. Problem 8.16 (CAPM and Portfolio Return) eBook Problem Walk-Through You have been managing a $5 million portfolio that has beta of 1.15 and a required rate of return of 8.175%. The current risk-free rate is 3%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.85, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places. %
p 19 A portfolio analyst has been asked to allocate investment funds among three different stocks. The relevant data for the stocks is shown in the following table f the goal is to maximize return while maintaining risk within acceptable bounds (in this case, a portfolio standard deviation of no more than 20%, find the proper allocation of the funds to each stock O Ak Risk (Standard Deviation to 5) 25% 12% 10% What is the expected retum of the optimal stock portfolio? Stock A B C O Multiple Choice O Return (R) 20% O 10% 15% 17.9% 15 15 19.15 36.4% Pair of Stocks A to B A to C to C Help Joint Risk (Covariance) 0.05 0.075 -0.05 Save & Exit Submit
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✓ Question 4 FI Two assets, Q & R, each have an expected return of 11.75%. Asset Q's standard deviation is 13% and Asset R's standard deviaion is 13.2%. A rational investor will choose: A. Either asset R or asset Q. B. Asset R. C. Asset Q. Question 5 Answers: 2 An investor whose portfolio is not diversified is subject to: Answers: A. systematic risk. Thursday, June 30, 2022 2:15:10 AM EDT W 4+ *3 B. non-systematic risk. C. both systematic risk and non-systematic risk. E $ 4 F4 R с F5 % 5 T F6 6 H Y F7 & 7 F8 U * 00 8 F9 81 L ( 9 F10 - F11 0 *+ F12 P PrtSc [ # 0 c Del Ba
Problem 11-12 Calculating Portfolio Betas [LO 3] You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 1.22 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
Question 4?
Problem 12-7 Stock Betas (LO4, CFA1) You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.57 and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Beta
3. Problem 8.07 (Portfolio Required Return) BA eBook Problem Walk-Through Suppose you are the money manager of a $5.02 million investment fund. The fund consists of four stocks with the following investments and betas: Investment $ 260,000 600,000 1,560,000 2,600,000 с D If the market's required rate of return is 12% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. % Stock A B Beta 1.50 (0.50) 1.25 0.75

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