(a) Why should Victor and Maria consider buying common stock as an investment with the additional money?
(b) If Victor and Maria bought a stock with a market price of $50 and a beta value of 1.8, what would be the likely price of an $8000 investment after one year if the general market for stocks rose 6 percent?
(c) What would the same investment be worth if the general market for stocks dropped 8 percent?

Victor and Maria have decided to increase their contribution to their investment portfolio since Victor is now age 59 and thinking about retiring in five years. For years, they have followed a moderate-risk investment philosophy and put their money in suitable stocks, bonds, and mutual funds. The value of their portfolio is now $320,000, and this is in addition to their paid-for rental property, which is worth $200,000. They plan to invest about $9000 every year for the next five years.

  • CreatedNovember 26, 2014
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