Jill Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875. If
Question:
Jill Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875.
If Jill replaces Stock A with another stock, E, which has a beta of 1.85, what will the portfolio's new beta be?
A. 0.92
B. 1.21
C. 1.3
D. 1.14
E.1.35
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Stock Beta 0.5 0.8 Investment $50,000 S50,000 S50,000 $50,000 S200,000 1.2 Total
Step by Step Answer:
B 121 Computation of the New Portfolio Beta Original Portfolio New P...View the full answer
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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