Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.32. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 2.15. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places

Q: 8.4   Assume that the risk-free rate is 3% and the market risk premium is 4%. What is the…

A: Required Rate is the least return that is anticipated by an investor on any security. It is…

Q: A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 3%.…

A: Capital Assets Pricing model : It is a model used to calculate the required rate of return for a…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: In finance, portfolio beta serves as a metric for assessing how volatile or exposed to systematic…

Q: Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Amount…

A: Beta of portfolio is weighted average beta of individual securities.  Beta is called as systematic…

Q: You have $12,260 to invest in a stock portfolio. Your choices are StockX with an expected return of…

A: Return on stock X is 14.2%. Return on stock Y is 8.61%. Let the amount invested in stock X is $A.…

Q: What is the below portfolio's beta assuming you have equal amounts of money invested in each stock?…

A: The evaluation of the systematic risk or volatility of a stock or the portfolio as compared to the…

Q: our investment club has only two stocks in its portfolio. $15,000 is invested in a stock with a beta…

A: Portfolio Beta is the weighted average beta of individual stock  Weight of stock 1 = 15000 /…

Q: LY ANSWER QUESTION 2) Consider the three stocks in the following table. Pt represents price at time…

A: The rate of return refers to the minimum return earned by the investor while investing in the stocks…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: The term portfolio beta refers to the measure of the riskiness of the whole portfolio in relation to…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: A portfolio refers to the collection of financial investments like stocks, bonds, commodities, cash,…

Q: None

A: a. Calculate the betas of the two stocks: Covariance(Stock, Market) / Variance(Market) = beta.For…

Q: An equally-weighted portfolio that consists of 13 stocks has a beta of 1.5. If you replace one of…

A: Here, Total no. of stocks = 13 Beta = 1.5 Beta of the stock that was replaced = 1.07 Beta of…

Q: Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free…

A: On Risk free portfolio:WA= Weight of Stock A.WA = SDB / SDA + SDB..= 55 / 45 + 55.= 0.55Thus, WB= 1-…

Q: Your investment club has only two stocks in its portfolio. $20,000 is invested in a stock with a…

A: The beta of the stock refers to the risk factor which then gets multiplied by the market risk…

Q: Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common…

A: Beta shows the risk related to the overall risk of market and beta of portfolio is the weighted beta…

Q: Consider the following table, which gives a security analyst’s expected return on two stocks and the…

A: Data given: Scenario Probability Market Return Aggressive Stock  Defensive Stock 1 0.5 8% 3.50%…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a…

A: The beta for the other stock is 1.59. Solution is provided in the explanation section. Hope this…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: The portfolio beta can be computed as sum of betas of stock divided by the number of stocks.

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Given data:> Exsting beta = 0.65> selling stock beta = 1> purchasing stock beta = 1.60

Q: You have $12,287 to invest in a stock portfolio. Your choices are Stock X with an expected return of…

A: The objective of this question is to determine the amount of money to be invested in Stock X to…

Q: An individual has $30,000 invested in a stock with a beta of 0.7 and another $30,000 invested in a…

A: The term portfolio beta refers to a metric which is used in calculating the overall risk of a…

Q: 1. A stock is now at $110. In a year its price will either be ssuming that the interest rate is r =…

A: Call value at a point in time is calculated as shown below. Call value=MaxStock price-Strike price,…

Q: You decide to form a portfolio of the following amounts invested in the following stocks. What is…

A: Portfolio beta can be calculated as the weighted average of beta of all the stocks in the portfolio.…

Q: You decide to form a portfolio of the following amounts invested in the following stocks. What is…

A: A portfolio refers to a collection of monetary resources, such as stocks, bonds, and cash…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Old Portfolio Beta = 1.35Total Number of stock = 20Beta of Sold Stock = 1.0Beta of purchase Stock=…

Q: You have $56,000. You put 24% of your money in a stock with an expected return of 13%, $31,000 in a…

A: As per the given information: Total amount = $56,00024% of money invested in a stock with an…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a…

A: Since equally invested in risk free asset and 2 stocks Weight of each stock=(1/3)

Q: You have a portfolio with a beta of 1.30. What will be the new portfolio beta if you keep 84 percent…

A: Portfolio Beta is calculated by doing weighted average of the Beta of the individual investment…

Q: You have $19,256 to invest in a stock portfolio. Your choices are Stock X with an expected return of…

A: Total Amount invested = $19,256Return on Stock X (RX) = 13.08% or 0.1308Return on Stock Y (RY) =…

Q: You are trying to develop a strategy for investing in two different stocks. The anticipated annual…

A: The expected rate of return is the average amount of interest that investing in stock provides while…

Q: Your investment club has only two stocks in its portfolio. $30,000 is invested in a stock with a…

A: Portfolio Beta = [ (weight of stock A * Beta of stock A) + (weight of stock A * Beta of stock A)…

Q: Consider the following information: Stock Return if Market Return Is: Stock 12 Stock A B C D e -12 E…

A: Beta refers to the concept used for measurement of the volatility or risk which is systematic in…

Q: You own a portfolio that has $5,758 invested in Stock A and $1,616 invested in Stock B. If the…

A: Expected Portfolio or the overall rate of return of Portfolio is the total return which is generated…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: New beta of the portfolio would be 1.94.Explanation:To calculate the new beta of the portfolio after…

Q: 2. Required Rate of Return Suppose TRF = 4%, FM = 9%, and TA = 8%. (a) Calculate Stock A's beta.…

A: Captial asset pricing model defines that the required rate of return or cost of equity is the sum of…

Q: 8.2 An individual has $20,000 invested in a stock with a beta of 0.8 and another $55,000 invested…

A: Portfolio is a bundle of various investment. Each investment consist some risk which is measure by…

Q: You have a portfolio with a beta of 1.59. What will be the new portfolio beta if you keep 86 percent…

A: Beta: It is a numerical value which evaluates the variations of a stock to shifts in the stock…

Q: onsider the following table, which gives a security analyst’s expected return on two stocks and the…

A: Beta of stock A =difference of aggressive stock      return /difference of market return…

Q: You decide to form a portfolio of the following amounts invested in the following stocks. What is…

A: A portfolio speaks to a collection of monetary resources, such as stocks, bonds, and cash…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a…

A: Formula Portfolio beta = (Weight of stock 1*Beta of stock 1)+(Weight of stock 2*Beta of stock 2)…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a…

A: The beta of a security is a measurement of the security's volatility of returns relative to the…

Q: Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio beta is the measure of an entire portfolio's sensitivity to market changes while stock…

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.