Question

You own 500 shares of Stock A at a price of $60 per share, 405 shares...

You own 500 shares of Stock A at a price of $60 per share, 405 shares of Stock B at $80 per share, and 500 shares of Stock C at $41 per share. The betas for the stocks are .8, 1.8, and .7, respectively. What is the beta of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)
  Beta   
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Total Portfolio value = price of Stock A*Shares of Stock A + price of Stock B*Shares of Stock B + price of Stock C*Shares of Stock C
=60*500+80*405+41*500
=82900
Weight of Stock A = price of Stock A*Shares of Stock A/Total Portfolio Value
= 30000/82900
=0.3619
Weight of Stock B = price of Stock B*Shares of Stock B/Total Portfolio Value
= 32400/82900
=0.3908
Weight of Stock C = price of Stock C*Shares of Stock C/Total Portfolio Value
= 20500/82900
=0.2473
Beta of Portfolio = Weight of Stock A*Beta of Stock A+Weight of Stock B*Beta of Stock B+Weight of Stock C*Beta of Stock C
Beta of Portfolio = 0.8*0.3619+1.8*0.3908+0.7*0.2473
Beta of Portfolio = 1.17
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
You own a stock portfolio invested 15% in Stock Q, 15% in Stock R, 20% in...
You own a stock portfolio invested 15% in Stock Q, 15% in Stock R, 20% in Stock S, and 50% in Stock T. The betas for these four stocks are 0.84, 1.17, 1.08, and 1.36, respectively. What is the portfolio beta? (Do not round intermediate calculations. Round the final answer to 3 decimal places.)
You own 2,200 shares of stock in Avondale Corporation. You will receive a $1.60 per share...
You own 2,200 shares of stock in Avondale Corporation. You will receive a $1.60 per share dividend in one year. In two years, the company will pay a liquidating dividend of $60 per share. The required return on the stock is 20 percent. Ignoring taxes, what is the current share price of the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price $ If you would rather have equal dividends in...
You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.50 per share...
You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.50 per share dividend in one year. In two years, the company will pay a liquidating dividend of $80 per share. The required return on the company's stock is 25 percent. a. Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If you would rather have equal dividends in...
You own 2,200 shares of stock in Avondale Corporation. You will receive a $1.40 per share...
You own 2,200 shares of stock in Avondale Corporation. You will receive a $1.40 per share dividend in one year. In two years, the company will pay a liquidating dividend of $48 per share. The required return on the company's stock is 20 percent. a. Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If you would rather have equal dividends in...
A couple of years ago, you bought 500 shares of the Los Pollos Hermnos stock that...
A couple of years ago, you bought 500 shares of the Los Pollos Hermnos stock that has a beta of 2.7 for a price of USD 8,000. You also bought 1,000 shares of the Doghouse Drive In (beta = 1.5) for USD 9,000 and 4,000 shares of Mesa Verde Bank (beta = 0.5) for USD 15,000. The market value per share of these stocks now are USD 20, USD 7, and USD 2, respectively. What is the current beta of...
You own 1,800 shares of stock in Avondale Corporation. You will receive a dividend of $1.50...
You own 1,800 shares of stock in Avondale Corporation. You will receive a dividend of $1.50 per share in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent.    Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)      Share price $    If you would rather have equal...
The following information is available for two stocks: Stock Shares Price per share Expected Return Standard...
The following information is available for two stocks: Stock Shares Price per share Expected Return Standard Deviation A 500 $40 14% 18% B 400 $25 21% 22% You are fully invested in the two stocks. The correlation coefficient between the two stock returns is .80 a. Compute the weights of the two stocks in your portfolio. b. Compute the portfolio expected return. c. Compute the portfolio standard deviation. d. You consider selling 250 shares of stock A, and buy with...
You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.60 per share...
You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.60 per share dividend in one year. In two years, the company will pay a liquidating dividend of $75 per share. The required return on the company's stock is 20 percent. b. If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations and round your answer to 2 decimal...
Collette has four different stocks in her portfolio. She owns 79 shares of Stock A with...
Collette has four different stocks in her portfolio. She owns 79 shares of Stock A with a market price of $41.00, 137 shares of Stock B which is currently at $66.00 per share, 163 shares of Stock C which is listed at $87.00 per share, and 259 shares of Stock D, with a price of $75.00 per share. If the betas and returns for the four stocks are as follows, What is Collette ’s portfolio beta and portfolio return? Stock...
Suppose you bought 1,050 shares of stock at an initial price of $55 per share. The...
Suppose you bought 1,050 shares of stock at an initial price of $55 per share. The stock paid a dividend of $0.64 per share during the following year, and the share price at the end of the year was $50. a. Compute your total dollar return on this investment. (A negative value should be indicated by a minus sign.) b. What is the capital gains yield? (A negative value should be indicated by a minus sign. Do not round intermediate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT