You are the owner of a well-diversified portfolio valued at $3,430,000, and you have an additional...
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You are the owner of a well-diversified portfolio valued at $3,430,000, and you have an additional $270,000 to invest. You want to purchase shares of Kroger (KR), Tesla (TSLA), and Bank of America (BAC). Of your additional investment of $270,000, you wish to put 20% in KR, 45% in TSLA, and 35% in BAC. A single-factor analysis yields the following results for the three stocks: KR: a_KR=-0.45, B_KR=0.88 TSLA: a_TSLA=+0.25, B_TSLA=2.00 BAC: a_BAC=+0.10, [B] BAC=1.30 What is the combined beta of these stocks using the weights given above? Before purchasing these three additional stocks, your portfolio beta is B_P=1.120. What will be the new value of beta after you have added the stocks to your portfolio? You are the owner of a well-diversified portfolio valued at $3,430,000, and you have an additional $270,000 to invest. You want to purchase shares of Kroger (KR), Tesla (TSLA), and Bank of America (BAC). Of your additional investment of $270,000, you wish to put 20% in KR, 45% in TSLA, and 35% in BAC. A single-factor analysis yields the following results for the three stocks: KR: a_KR=-0.45, B_KR=0.88 TSLA: a_TSLA=+0.25, B_TSLA=2.00 BAC: a_BAC=+0.10, [B] BAC=1.30 What is the combined beta of these stocks using the weights given above? Before purchasing these three additional stocks, your portfolio beta is B_P=1.120. What will be the new value of beta after you have added the stocks to your portfolio?
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To calculate the combined beta of the stocks using the given weights we can use the formula for weig... View the full answer
Related Book For
Fraud examination
ISBN: 978-0538470841
4th edition
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma
Posted Date:
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