Question
Suppose we have the following information: Security Amount invested Expected Return &n
Suppose we have the following information:
Security Amount invested Expected Return Beta
Stock A $2,000 7% 0.70
Stock B 4,000 10 0.85
Stock C 6,000 13 1.10
Stock D 8,000 16 1.30
- What is the expected return on this portfolio?
- What is the beta of this portfolio?
- Does this portfolio have more or less systematic risk than an average asset?
Homework Answers
Answer #1
1)
2)
3)
It has beta more than 1, It is more systematic risk than average asset.
Not the answer you're looking for?
Similar Questions
We have the following investments in our portfolio: Investment Amount  
We have the following
investments in our portfolio:
Investment
Amount
Expected
Return
Beta
A
Stock $2,000 8% .80
B
Stock $2,500 12% .95
C
Stock $2,500 14% 1.20
D
Stock $3,000 16% 1.50
What is the expected return on this portfolio? What is the beta of
this portfolio? Does this portfolio have more or less systematic
risk than an average asset? Please show your calculations.
You have the following information on two securities in which you have invested money: Security Expected...
You have the following information on two securities in which
you have invested money:
Security Expected Return
Xerox 15% Kodak 12%
Standard deviation
4.5% 3.8%
Beta %Invested
1.20 35% 0.98 65%
The rate of return on the market portfolio is 17% and the
risk-free rate of return is 7.5%.
a) Compute the expected return on the portfolio.
b) Compute the beta of the portfolio.
c) Compute the required rate of return on the portfolio using
the CAPM.
d) Is the...
A portfolio has the following stocks: Stock Amount Invested Stock's Beta A $2,000 1.4 B $8,000...
A portfolio has the following stocks:
Stock
Amount Invested
Stock's Beta
A
$2,000
1.4
B
$8,000
1.2
C
$15,000
1.6
Suppose that the risk-free rate of return is 4% and the market
return is 20%.
(1) What are the weights for Stocks A, B and C, respectively?
(
2) What is the portfolio’s beta?
(3) What is the expected return for Stock A?
(4) What is the expected return for the portfolio?
HW #6 1. Use the following information to answer the questions. State Probability Stock A return...
HW #6
1. Use the following information to answer the
questions.
State
Probability
Stock A return
Stock B return
Good
Normal
Bad
0.3
0.6
0.1
8%
2%
-3%
5%
1%
-1%
(a). Given that you form a portfolio by investing $4,000 in
Stock A and $1,000 in Stock B, what is the expected return on your
portfolio?
(b).What is the variance and standard deviation of your
portfolio?
(c). Suppose that Stock A has a beta of 1.5 and Stock B...
You have just invested in a portfolio of three stocks. The amount of money that you...
You have just invested in a portfolio of three stocks. The
amount of money that you invested in each stock and its beta are
summarized below. Stock Investment Beta A $210,000 1.47 B 315,000
0.61 C 525,000 1.16 Calculate the beta of the portfolio and use the
Capital Asset Pricing Model (CAPM) to compute the expected rate of
return for the portfolio. Assume that the expected rate of return
on the market is 16 percent and that the risk-free rate...
Suppose you have following information: Security Beta Expected return Fires Inc. &n
Suppose you have following information:
Security Beta Expected
return
Fires
Inc. 1.47 16.2%
Day
Co. 0.84 12.7%
What would the risk-free rate have to be for the securities to
be correctly priced?
Question 20 options:
12.00%
13.12%
9.78%
8.00%
13.59%
STOCK PERCENTAGE OF PORTFOLIO BETA EXPECTED RETURN 1 20% 0.95 16% 2 10% 0.90 13% 3...
STOCK PERCENTAGE OF PORTFOLIO
BETA EXPECTED RETURN
1 20% 0.95 16%
2 10% 0.90 13%
3 25% 1.15 20%
4 5% 0.70 12%
5 40% 1.55 25%
(Portfolio beta and security market line) You own a portfolio
consisting of the following stocks:. The risk-free rate is 4
percent.Also, the expected return on the market portfolio is 10
percent.
a. Calculate the expected return of your portfolio. (Hint: The
expected return of a portfolio equals the weighted average of the
individual...
A. You own a $20,000 portfolio that is invested in a risk-free security and Stock A....
A. You own a $20,000 portfolio that is invested in a risk-free
security and Stock A. The beta of Stock A is 1.60 and the portfolio
beta is 1.00. What is the amount of the investment in Stock A?
B. Stock A has a beta of 2.0 and an expected return of 13.0
percent. Stock B has a beta of 1.12 and an expected return of 13.70
percent. At what risk-free rate would these two stocks be correctly
priced?
If security X’s beta is 1.30, the expected return on the market is 6%, and the...
If security X’s beta is 1.30, the expected return on the market
is 6%, and the risk-free rate is 1%.
What must the expected return on this stock be? (10
points)
b.If the current expected return of security X is 8%, is the
stock price fair, undervalued or overvalued? (10 points)
You have just invested in a portfolio of three stocks. The amount of money that you...
You have just invested in a portfolio of three stocks. The
amount of money that you invested in each stock and its beta are
summarized below.
Stock
Investment
Beta
A
$188,000
1.51
B
282,000
0.52
C
470,000
1.35
Calculate the beta of the portfolio and use the capital asset
pricing model (CAPM) to compute the expected rate of return for the
portfolio. Assume that the expected rate of return on the market is
18 percent and that the risk-free rate...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 25 minutes ago
asked 39 minutes ago
asked 41 minutes ago
asked 42 minutes ago
asked 54 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago
asked 2 hours ago