Using the data in Problem 4, suppose you are holding a market portfolio and have invested $46,000

Question:

Using the data in Problem 4, suppose you are holding a market portfolio and have invested $46,000 in Stock C.

a. How much have you invested in Stock A?

b. How many shares of Stock B do you hold?

c. If the price of Stock C suddenly drops to $5 per share, what trades would you need to make to maintain a market portfolio?

Problem 4

Suppose all possible investment opportunities in the world are limited to the five stocks listed in the table below. What does the market portfolio consist of (what are the portfolio weights)?

image text in transcribed

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

See More Books

Question Posted: Feb 29, 2024 04:01 AM

See More Questions

Using the data in Problem 4, suppose you are holding a market portfolio, and have invested $12,000 in Stock C. a. How much have you invested in Stock A? b. How many shares of Stock B do you hold? c....
4. (5 marks) The following data are taken from a polynomial p(x) of degree 5. What is the actual degree of p(x)? Justify your answer. X -2 -1 0 1 2 3 p(x) -5 1 1 1 7 25
Problem 8.1. Write the following functions as (infinite) power series centered at 0 a) exp(2x) b) ln(1 - 3x) What is the radius of convergence of these power series?
Draw the array's dimensions and contents of the following initialized two-dimensional arrays: 1) 2) int[][] arr1= new int [3] [4]; arr1 [0] [1]-5; arrl [0] [2] = 10: arrl [1] [2]-7; arri [0] [3] = 9;...
How does training differ between companies that are considered Investment Leaders and those that are not?
An alternative definition of the IRR is the rate which makes the principal at the beginning of year 6 equal to zero. 9 This is shown in the printout above, in which cell E9 gives the principal at the...
The table at the left shows the sample ages of students in a class. Find the mean, median, and mode of the ages. Are there any outliers? Which measure of central tendency best describes a typical...
Southwest Pediatrics has the following balances on December 31, 2015, before any adjustment: Accounts Receivable = $130,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31,...
8.5 moles of an ideal gas (monatomic) expand adiabatically, and performing 8300 J of work in the process. (a) What is the change in internal energy of the gas?. (b) What is the change in temperature...
Suppose Best Buy stock is trading for $20 per share for a total market cap of $6 billion, and Walt Disney has 2.3 billion shares outstanding. If you hold the market portfolio, and as part of it hold...
Aluminum maker Alcoa has a beta of about 1.96, whereas Hormel Foods has a beta of 0.65. If the expected excess return of the marker portfolio is 3%, which of these firms has a higher equity cost of...
A piezocone test was carried out at a site, and the following readings were recorded for the cone resistance q c and sleeve friction f s . Determine the soil present at these depths. Cone resistance,...
Select a business that you will use to apply social media marketing strategies. You are encouraged to use a real business or organization in order to gain practice providing these services, but you...
Plot the autocorrelation functions against the lag order for the following models. Label the x-axis and y-axis appropriately and clearly. For all models, &tis a white noise term with a mean of zero...
Question 3: Zara's head of inventory Amy has ordered 450 units of pink top in size S. The order cost is 8$, the annual holding cost is 2.3$, the pink top cost 13$, the annual holding cost rate is 18%...
Mean diameter of holes produced by a drilling machine bit is 4.05 mm and the standard deviation of the diameters is 0.0028 mm. For twenty holes drilled using this machine, determine, correct to the...
Based on the below financials, would bod investment be a good financianing option for the business health. (numbers are in billions.) CURRENT RATIO (Current Assets / Current Liabilities) TOTAL ASSET...
Spherical mirrors. Object O stands on the central axis of a spherical mirror. For this situation, each problem in Table 34-3 gives object distance Ps (centimeters), the type of mirror, and then the...
Kenneth Hubbard has prepared the following list of statements about managerial accounting and financial accounting. 1. Financial accounting focuses on providing information to internal users. 2....
Consider two loans with one-year maturities and identical face values: a 7.9% loan with a 1.02% loan origination fee and a 7.9% loan with a 4.7% (no-interest) compensating balance requirement. Which...
Your firms bank has offered you two options for short-term financing in the amount of $450,000. The first option is a committed line of credit with a commitment fee of 0.4% (EAR) and an interest rate...
Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $10,000 with terms of 2/10...
b) [10 marks] Consider two stocks, A and B, with expected returns and volatilities given by E[r]=10%, A=20%, E[B]=15%, B=30%. The riskless rate is 4%. The correlation of stock returns is 0.3....
Mayco Inc would like to set up a new plant. Currently, Mayco has an option to buy an existing building at a cost of $ 24,000.Necessary equipment for the plant will cost $ 16,000, including...
DATA Amount Description Sales price per unit Variable cost per unit Contribution margin per unit Total fixed costs Profit at breakeven Target profit Requirement 1 Use the contribution margin approach...

Using the data in Problem 4, suppose you are holding a market portfolio and have invested $46,000

Question:

Stock ABCDE Price/Share ($) 8 17 7 43 48 Number of Shares Outstanding (millions) 10 12 3 1 20

Step by Step Answer:

Corporate Finance The Core

Students also viewed these Business questions