uppose that a portfolio consists of the following stocks: he risk-free rate (f) is 5 percent and the market risk premium (fm - f) is 9.4 percent. . Determine the beta for the portfolio. Round your answer to two decimal places. Stock Chevron General Electric Whirlpool % Amount $15,000 45,000 40,000 Beta 0.80 1.20 1.20 Determine how much General Electric stock one must sell and reinvest in Chevron stock in order to reduce the beta of the portfolio to 1.00. Do not round intermediate calculations. Round your answer to the nearest dollar. $ . Determine the expected return on the portfolio in parts a and b. Do not round intermediate calculations. Round your answers to two decimal places. Expected Return (Original portfolio): % Expected Return (Revised portfolio):
uppose that a portfolio consists of the following stocks: he risk-free rate (f) is 5 percent and the market risk premium (fm - f) is 9.4 percent. . Determine the beta for the portfolio. Round your answer to two decimal places. Stock Chevron General Electric Whirlpool % Amount $15,000 45,000 40,000 Beta 0.80 1.20 1.20 Determine how much General Electric stock one must sell and reinvest in Chevron stock in order to reduce the beta of the portfolio to 1.00. Do not round intermediate calculations. Round your answer to the nearest dollar. $ . Determine the expected return on the portfolio in parts a and b. Do not round intermediate calculations. Round your answers to two decimal places. Expected Return (Original portfolio): % Expected Return (Revised portfolio):
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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Question
vi.
Subject :- Accounting
Transcribed Image Text:Suppose that a portfolio consists of the following stocks:
The risk-free rate (ƒ) is 5 percent and the market risk premium (m - ƒ ) is 9.4 percent.
a. Determine the beta for the portfolio. Round your answer to two decimal places.
Stock
Chevron
General Electric
Whirlpool
Amount
$15,000
45,000
40,000
%
b. Determine how much General Electric stock one must sell and reinvest in Chevron stock in order to reduce the beta of the portfolio to 1.00. Do not round intermediate calculations. Round your answer to the nearest dollar.
$
c. Determine the expected return on the portfolio in parts a and b. Do not round intermediate calculations. Round your answers to two decimal places.
Expected Return (Original portfolio):
%
Expected Return (Revised portfolio):
Beta
0.80
1.20
1.20
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