You own a portfolio that has a total value of $250,000 and it is invested in Stock D with a bets of 79 and Stock E with a beta of 146. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D? $78,358.21 $58.768.85 O $39,179.50 O $68.563.43 O $17164179

You own a portfolio that has a total value of $250,000 and it is invested in Stock D with a bets of 79 and Stock E with a beta of 146. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D? $78,358.21 $58.768.85 O $39,179.50 O $68.563.43 O $17164179

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 plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient A $160 million 0.5 В 120 million 1.2 C 80 million 1.9 80 million 1.0 E 60 million 1.4 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -29 % 0.2 0.4 13 0.2 28 0.1 48 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. ri = 1.0% + (9.7%)b¡ II. ri = 1.0% + (9.4%)b¡ III. ri = 3.0% + (9.7%)bi IV. ri = 5.9% + (11.6%)b¡ V. ri = 3.0% + (9.4%)b¡ -Select- b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a…
An investor is forming a portfolio by investing $8,000 in stock A which has a beta of 0.80, and $8,000 in stock B which has a beta of 2.20. The return on the market is equal to 8% and treasure bonds have a yield of 3% (rRF). What’s the portfolio beta? 0.80 1.50 1.90 2.20
Currently, you own a portfolio comprised of the following three securities. How much of the riskiest security should you sell and replace with risk-free securities if you want your portfolio beta to equal 90 percent of the market beta? Stock Value $13,640 15,980 23,260 E F Multiple Choice O $7,023.15 $7,811.29 O $8,666.67 O $7,753.51 Beta 1.13 1.48 .86 $8,318.50
You have a portfolio with the following: Stock Number of Shares Price Expected Return W 875 $ 52 14% X 775 29 18 Y 525 65 16 Z 750 50 17 What is the expected return of your portfolio?
An investor plans to invest funds in the following stocks: Stock Beta Amount Invested A 1.39 $1,939.00 B 1.21 $2,818.00 C 0.75 $1,378.00 The risk-free rate is currently 3.00%, while the market risk premium is 6.00%. What is the beta of this portfolio?
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You have a portfolio with the following: Stock Number of Shares Price Expected Return W 975 $ 56 13% X 875 33 17 Y 625 69 15 Z 850 54 16 What is the expected return of your portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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You have a portfolio with a beta of 1.59. What will be the new portfolio beta if you keep 86 percent of your money in the old portfolio and 14 percent in a stock with a beta of 0.58? (Round your answer to 2 decimal places.) New portfolio beta: ___.__%
onsider the following table, which gives a security analyst’s expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return Aggressive Stock Defensive Stock 1 0.5 7% 2.2% 5.0% 2 0.5 15 25 12 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.)
Stock A has a volatility of 54% and a correlation of 19% with your current portfolio. Stock B has a volatility of 37% and a correlation of 32% with your current portfolio. You currently hold both stocks. Which of the following choices below will increase the volatility of your portfolio: (i) selling a small amount of stock B and investing the proceeds in stock A, or (ii) selling a small amount of stock A and investing the proceeds in stock B? The marginal contribution to risk for stock A is%. (Round to two decimal place.)
Pick the best answer to the following portfolio? (Round off all numbers to 2 decimal places) Stock Amount Invested Beta A $6,700 1.16 B 3,000 1.23 C 8,500 0.79 Group of answer choices The portfolio has more systematic risk than the market. The portfolio has more total risk than the market. The portfolio has no systematic risk. The portfolio has same systematic risk as the market. The portfolio has less systematic risk than the market.

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