There are few, if any, real companies with negative betas. But suppose you found one with B =-0.05. a-1. How would you expect this stock's rate of return to change If the overall market rose by an extra 7%? (A negative answer should be Indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.) Change in stook's rate of retum a-2 How would the stock's rate of return change If the overall market fell by an extra -7%? (A negative answer should be Indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.) Change in stook's rate of retum b. You have $1.1 million Invested in a well-diversified portfollo of stocks. Now you recelve an additional $40,000 bequest. Which of the following actions willyleld the safest overall portfollo return?
There are few, if any, real companies with negative betas. But suppose you found one with B =-0.05. a-1. How would you expect this stock's rate of return to change If the overall market rose by an extra 7%? (A negative answer should be Indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.) Change in stook's rate of retum a-2 How would the stock's rate of return change If the overall market fell by an extra -7%? (A negative answer should be Indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.) Change in stook's rate of retum b. You have $1.1 million Invested in a well-diversified portfollo of stocks. Now you recelve an additional $40,000 bequest. Which of the following actions willyleld the safest overall portfollo return?
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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Transcribed Image Text:There are few, If any, real companles with negative betas. But suppose you found one with B =-0.05.
a-1. How would you expect this stock's rate of return to change If the overall market rose by an extra 7%? (A negative answer should
be indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.)
Change in stock's rate of retum
%
a-2 How would the stock's rate of return change If the overall market fell by an extra -7%? (A negative answer should be indicated
by a minus sign. Input your answer as a percent rounded to 2 decimal places.)
Change in stock's rate of retum
b. You have $1.1 million Invested in a well-diversified portfolio of stocks. Now you recelve an additlonal $40,000 bequest. Which of the
following actions will yleld the safest overall portfollo return?
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