CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305661653
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Chapter 8, Problem 12PROB
Summary Introduction
Portfolio beta is used to measure the portfolio’s overall systematic risk of an investment which equals the weighted average of all individual stock’s beta coefficient in a portfolio.
The amount of $120,000 invested in four stocks and its portfolio’s beta coefficient is equal to 0.8. The value of the stock which is to be sold is $48,000 and its beta coefficient is 1.
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Additional information:
Assume the M&M Model with corporate holds. Assume investors are taxed at a rate of 25% on equity income and 45% on debt income at personal tax rate.
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