Question

Your investment club has only two stocks in its portfolio. $50,000 is invested in a stock with a beta of 0.8, and $30,000 is invested in a stock with a beta of 2.0. What is the portfolio's beta?

AA Corporation's stock has a beta of 1.1. The risk-free rate is 4%, and the expected return on the market is 13%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to two decimal places.

Answer #1

**Answer to Question
1:**

Amount invested in Stock 1 = $50,000

Amount invested in Stock 2 = $30,000

Total Amount invested = $50,000 + $30,000 = $80,000

Weight of Stock 1 = $50,000 / $80,000

Weight of Stock 1 = 0.625

Weight of Stock 2 = $30,000 / $80,000

Weight of Stock 2 = 0.375

Portfolio Beta = (Weight of Stock 1 * Beta of Stock 1) + (Weight
of Stock 2 * Beta of Stock 2)

Portfolio Beta = (0.625 * 0.8) + (0.375 * 2.0)

Portfolio Beta = 0.50 + 0.75

**Portfolio Beta = 1.25**

**Answer to Question
2:**

Required Return = Risk Free Rate + Beta * (Market Return – Risk
Free Rate)

Required Return = 4.00% + 1.10 * (13.00% - 4.00%)

Required Return = 4.00% + 9.90%

**Required Return = 13.90%**

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1b. AA Corporation's stock has a beta of 0.4. The risk-free rate
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required rate of...

1. Your investment club has only two stocks in its portfolio.
$30,000 is invested in a stock with a beta of 0.5, and $45,000 is
invested in a stock with a beta of 1.8. What is the portfolio's
beta? Do not round intermediate calculations. Round your answer to
two decimal places.
2. AA Corporation's stock has a beta of 0.8. The risk-free rate
is 3%, and the expected return on the market is 11%. What is the
required rate of...

Your investment club has only two stocks in its portfolio.
$50,000 is invested in a stock with a beta of 0.9, and $75,000 is
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beta? Do not round intermediate calculations. Round your answer to
two decimal places.

If you have $30,000 invested in each of two stocks and $20,000
invested in each of another three stocks and the betas on the
stocks above are 0.8, 1.1, 1.0, 1.2 and 1.4, respectively, what is
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portfolio if the risk-free rate is 4.6% and the return on the
market portfolio is 10.4%? What are the risk premiums for the
market and for your portfolio?

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these are the only two investments in her portfolio, what is her
portfolio's beta? Do not round intermediate calculations. Round
your answer to two decimal places.

An individual has $50,000 invested in a stock with a beta of 0.5
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these are the only two investments in her portfolio, what is her
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your answer to two decimal places.

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required rate of return on AA's stock? Do not round intermediate
calculations. Round your answer to one decimal place.

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(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
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What must the beta be for the other stock in your portfolio?
(Do not round intermediate calculations and round your
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