Please answer the following You have $1,000,000 to invest in a portfolio which will have the samerisk as the market portfolio. Keeping this in mind, complete thefollowing table:AssetTable 3Investment BetaStock A $200,0000.8Stock B $100,0001.3Stock C1.5Risk free assetTotal investment $1,000,000Hint: Start by computing the weight for stock C

Beta of market portfolio is 1 and so this portfolio will have the beta of 1.Beta of risk free asset…

Answered: You have $1,000,000 to invest in a…

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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You want to create a portfolio equally as risky as the market, and you have $5M to invest. Given the information below, what is your investment in the risk-free asset? Asset Stock A Stock B Stock C Risk-free Asset $0.8M $0.7M $0.9M $1.1M Investment $1M $2M Beta 0.7 1.25 1.5
You want to create a portfolio equally as risky as the market, and you have $250,000 to invest. Given this information, fill in the three missing pieces of information in the following table. Show your calculations: Investment Betal 0.90 Asset Stock A $50,000 Stock B $70,000 Stock C Risk-Free Asset 1.25 1.60
Qn4: Assume a two-stock portfolio created with $50,000 is invested in both HT and Collections. The expected returns are given below: Calculate the portfolio's return for each state of economy and fill them in the last column, under "Portfolio" (Hint: The portfolio's expected return is a weighted average of the returns of the portfolio's component assets). Calculate the portfolio's expected return (Hint: You have to incorporate the probability distribution of each state of economy). Calculate the portfolio's standard deviation. Economy Recession Below average Average Above average Boom Prob. HT 0.1 -27.0% 0.2 -7.0% 0.4 15.0% 0.2 30.0% 0.1 45.0% Coll 27.0% 13.0% 0.0% -11.0% -21.0% Portfolio
Assume the betas for securities A, B, and C are as shown here. (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Security Beta A 1.58 B 0.65 C −0.23 If you have a portfolio with $30,000 invested in each of Investment A, B, and C, what is your portfolio beta?
Suppose we have the following information: Securit Amount Invested Expected Return Beta Stock A RM1 ,OOO 8% 0.80 Stock B RM2,OOO 12% 0.95 Stock C RM3,OOO 15% 1.10 Stock D RM4,OOO 18% a) Compute the expected return on this portfolio. b) Calculate the beta of the portfolio. c) Does this portfolio have more or less systematic risk than an average asset? Explain.
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 If the expected price next year will be $23, what is the fair price today, that is, the stock price now that will not allow for arbitrage profits?
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 If the expected price next year will be $23, what is the fair price today, that is, the stock price now that will not allow for arbitrage profits? xx
You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. Given this information, fill in the rest of the following table: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Asset Stock A Stock B Stock C Risk-free asset Investment Beta $ 195,000 $ 340,000 $ $ 0.90 1.15 1.23
Mike Flannery holds the following portfolio: What is the portfolio's beta? Do not round your intermediate calculations.Stock Investment BetaA $150,000 1.40B $20,000 0.80C $130,000 1.00D $75,000 1.20Total $375,000 Question 6Select one: a. 1.02 b. 1.05 c. 1.28 d. 1.19 e. 1.43
You are exploring the use of APT in making investment choices. You have identified three factors labelled F1, F2, and F3 with corresponding risk premia RP1 = 3%, RP2 = 6%, and RP3 = 2%. A stock with ticker ABC has historically shown returns which have followed the equation: rABC=0.14+.50F1+1.20F2+.8F3+eABC What is the equilibrium rate of return for stock ABC using the APT, if the T-bill rate is 5%?
Consider a portfolio consisting of the below securities with the below characteristics: Security Amount Invested($) Beta Expected Return A 1,5 MIL 1.0 12.0%B 1.0 MIL 1.5 13.5%C 2.0 MIL 0.8 9.0% Required:a) Calculate the portfolio’s Beta. b) Calculate the portfolio’s expected return. c) Discuss the Capital Asset Pricing Model (CAPM) explaining what it is used forand which are its limitations.
1. calculate the beta of the portfolio below consisting of assets x, y and z. discuss the meaning of the number calculated and include in your answer what type of investor is likely to invest in this portfolio. Asset Weight (Wi) Beta (βi) X 0.30 0.09 Y 0.50 0.90 Z 0.20 0.16

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