Question

12.) Mrs. Landis has a 2-stock portfolio with a total value of $530,000. $175,000 is invested...

12.) Mrs. Landis has a 2-stock portfolio with a total value of $530,000. $175,000 is invested in Stock A with a beta of 1.35 and the remainder is invested in Stock B with a beta of 0.75. What is her portfolio's beta?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Portfolio beta is the weighted average beta of both the stocks. Therefore, we first need to calculate the weights of both the stocks.

Total value of portfolio = $ 530,000

Value of Stock A = $ 175,000

Value of Stock B = 530,000 - 175,000 = $ 355,000

Weight of Stock A = Value of Stock A / Total value of portfolio = 175,000 / 530,000 = 0.33

Weight of Stock B = Value of Stock B / Total value of portfolio = 355,000 / 530,000 = 0.67

Portfolio beta = (Weight of Stock A * Beta of Stock A) + (Weight of Stock B * Beta of Stock B)

Portfolio beta = (0.33*1.35) + (0.67*0.75) = 0.948

Thus portfolio beta = 0.948

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Tom Hank’s 2-stock portfolio has a total value of $100,000. $60,000 is invested in Stock A...
Tom Hank’s 2-stock portfolio has a total value of $100,000. $60,000 is invested in Stock A with a beta of 1.3 and the remainder is invested in Stock B with a beta of .65. What is her portfolio's beta? (2pts) a. 1.35 b. 1.23 c. 1.04 d. 1.17 e. 1.42
Investor Corporation has a $175,000 stock portfolio. $60,000 is invested in a stock with a beta...
Investor Corporation has a $175,000 stock portfolio. $60,000 is invested in a stock with a beta of 1.35 and the remainder is invested in a stock with a beta of 2.45. These are the only two investments in the portfolio. What is the portfolio’s beta? Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
Dukes has $115,000 invested in a 2-stock portfolio. $45,000 is invested in Stock X and the...
Dukes has $115,000 invested in a 2-stock portfolio. $45,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.75 and Y's beta is 0.70. What is the portfolio's beta?
Bill Dukes has $100,000 invested in a 2-stock portfolio. $32,500 is invested in Stock X and...
Bill Dukes has $100,000 invested in a 2-stock portfolio. $32,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Do not round your intermediate calculations. Round the final answer to 2 decimal places. a. 1.06 b. 1.25 c. 0.72 d. 0.96 e. 0.77
Use the following information to answer the next two questions:Myrna has $175,000 invested in a stock...
Use the following information to answer the next two questions:Myrna has $175,000 invested in a stock that has a beta of 0.6 and $400,000 invested in a stock with a beta of 1.4. The return on the market is 11 percent, and the risk-free rate of return is 4.5 percent. Show ALL your work. a) If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places. b) Use the...
5. Trump invested $60,000 in a 2-stock portfolio. He invested $45,000 in Stock A, and the...
5. Trump invested $60,000 in a 2-stock portfolio. He invested $45,000 in Stock A, and the rest in Stock B. A's beta is 1.60 and B's beta is 0.70. What is the portfolio's beta? a. 1.167 b. 1.262 c. 1.318 d. 1.327 e. 1.375
An individual has $300,000 invested in a stock with a beta of 1.1; $250,000 invested in...
An individual has $300,000 invested in a stock with a beta of 1.1; $250,000 invested in a stock with a beta of 1.4; $120,000 in a stock with a beta of 0.5; and $500,000 in a stock with a beta of 0.8. If these are the only investments in her portfolio, what is her portfolio's beta?
Mr. Jones has a 2-stock portfolio with a total value of $550,000. $205,000 is invested in...
Mr. Jones has a 2-stock portfolio with a total value of $550,000. $205,000 is invested in Stock A and the remainder is invested in Stock B. If standard deviation of Stock A is 19.45%, Stock B is 10.60%, and correlation between Stock A and Stock B is –0.10, what would be the expected risk on Mr. Jones’ portfolio (standard deviation of the portfolio return)? Calculate with at least 4 decimal places and round your answer to two decimal places. For...
An individual has $25,000 invested in a stock with a beta of 0.4 and another $80,000...
An individual has $25,000 invested in a stock with a beta of 0.4 and another $80,000 invested in a stock with a beta of 2.2. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places.
An individual has $30,000 invested in a stock with a beta of 0.4 and another $50,000...
An individual has $30,000 invested in a stock with a beta of 0.4 and another $50,000 invested in a stock with a beta of 2.2. If 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.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT