You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 1.13 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio?

Q: 1. Clearly explain why some risks are systematic and others non-systematic. How is it possible for…

A: Introduction 1. Unsystematic is firm specific risk which can be diversified but systematic risk is…

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A: In finance a portfolio is a collection of different financial assets and securities like stocks,…

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A: Beta Beta is the measure of risk of a stock or portfolio. The beta of the overall market is always…

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A: Beta: Beta can be defined as the measure of instability of a separate stock relative to the…

Q: what must the beta be for the other stock in your portfolio?

A: The beta of a portfolio helps measure the portfolio's systematic risk. The portfolio beta is…

Q: 8. Suppose security X achieves 20% return with half chance and -10% return with half chance. (a)…

A: The expected return is the return that an investor expects from its investment. Risk of an asset is…

Q: Stock Y has a beta of 0.6 and an expected return of 8.89 percent. Stock Z has a beta of 2.1 and an…

A: The below expression can be used to calculate the risk-free rate:

Q: You have also decided that you have a risk-aversion (A) of 4. (a) What is the expected return for…

A: Since you have posted a question with multiple subparts, we have answered the first three subparts…

Q: 1.25

A: Please note that as per Bartleby answering guidelines, we are allowed to answer only first 3…

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A: Proportion invested in Stock A, Stock B and Treasury Bills are equal that is 1/3 Beta of Stock A is…

Q: Suppose you have a portfolio that has $290 in stock A with a beta of 1.04, $1, 160 in stock B with a…

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Br*Wr)+(Bs*Ws)whereBp =beta of…

Q: Which of the following statements is CORRECT? a. The higher the correlation between the stocks in…

A: The objective of the question is to identify the correct statement about portfolio risk and…

Q: The expected return and standard deviation of Stock A are 12% and 24%, respectively. The expected…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: What should be the risk premium and return on a stock with a Beta of zero under the Capital Asset…

A: CAPM is Capital Asset Pricing Model, used to calculated required return of stock based on 3…

Q: What must the beta be for the other stock in your portfolio?

A: Beta is an estimate of risk prevailing in the market. When risk prevailing in the market is measured…

Q: You have chosen a stock for your two-asset portfolio and you need to choose one more stock. Which of…

A: Portfolio is combination of stocks in different proportions so as to minimize the risk and increase…

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: s there any portfolio that can be constructed with stocks 1, 2, and risk-free security that will…

A: Portfolio and the purpose of constructing one! An amount intended for investment may be invested in…

Q: Questions 19 and 20 are related. Assume that two investors each hold a portfolio, and that…

A: We have two questions related to the portfolios otherwise identical except the beta value. They have…

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

A: Given:Market rateAggressive stock Defensive stock 7%-4%4%23%37%11%Risk-free rate4%

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

A: Since equally invested in risk free asset and 2 stocks Total no. of stocks in the portfolio = 3…

Q: If you compare two stocks which have identical firm-specific risk. However, one of these options has…

A: Beta is a numerical measurement that measures how a stock reacts to movements in the general stock…

Q: Suppose that an asset has a CAPM beta of 1.5. Which one of the following statemenits is correct? OA…

A: Beta is the measurement of the volatility of the returns on an asset when compared to market…

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

A: As per the given information: Number of Stocks =13 Beta of 13 stocks = 1.5 Replacing Stock with a…

Q: You currently hold a diversified stock portfolio that is exactly as risky as the market.  You are…

A: True Options are 1,3,4,5. 1.When the beta value increases the risk premium of the portfolio. The…

Q: Give typing answer with explanation and conclusion  Which of the following statements is CORRECT?…

A: Diversified portfolio An investor's total risk profile is decreased by a diversified portfolio,…

Q: porfolios risk.

A: Stocks when added again & again to the portfolio would reduce the standard deviation & rp…

Q: Which of the following statements is CORRECT? a. The slope of the Security Market Line is beta.…

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Q: Assume that you have a portfolio of two stocks, X and Y. If the risk of stock X is 1.2 and the risk…

A: Given, the risk of stock X is 1.2 and the risk of stock Y is 4

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

A: Beta of portfolio comprising of risk free asset and two stocks is computed as follows:-Bp = (wr*Br)…

Q: What is a stock's alpha? Group of answer choices The amount you expect to earn on a security…

A: The CAPM is used to determine an asset's expected return based on the risk-free rate, the asset's…

Q: You are given the following information for Wine and Cork Enterprises (WCE): rRF = 2%; rM = 10%;…

A: Risk free rate is the minimum interest one can receive in the market without taking up any risk.…

Q: Stock H has a beta of 1.6, while Stock L has a beta of 0.7.  If investors’ aversion to risk…

A: Risk:Risk is taking a chance, when the amount gets invested then there is a risk factor which means…

Q: Stock A has a beta of 1.5 and Stock B has a beta of 0.8. Which of the following statements is most…

A: Beta is an important measure of risk used to evaluate stocks. It is a measure of a stock's…

Q: Consider the following portfolio choice problem. The investor has initial wealth w and utility u(x)…

A: Initial wealth and the utility function of an investor have been provided. As a first step, we need…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: Beta of stock A (B1) = 1.42 Beta of stock B  = B2 Beta of U.S. T-Bill (B3)  = 0 Weight of stock A…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: We need to use portfolio beta equation below Portfolio beta =Weight of stock A*Beta of stock A…

Q: Compute the risk and return of the above two stocks and justify using your answers as well as any…

A: To calculate the expected return and risk of both stocks, we need to first calculate the weighted…

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

A: Beta can be calculated as