The Balanced, Inc., has three different product lines. Its least risky product line has a beta of
Question:
The Balanced, Inc., has three different product lines. Its least risky product line has a beta of 1.7, while its middle-risk product line has a beta of 1.8, and its most risky product line has a beta of 2.1. The market value of the assets invested in these lines is $1 billion for the least risky line, $3 billion for the middle-risk line, and $7 billion for the riskiest product line. What is the beta of the assets of The Balanced, Inc.?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (18 reviews)
Using the formula for the beta of an n asset portfolio we know ...View the full answer
Answered By
Bhartendu Goyal
Professional, Experienced, and Expert tutor who will provide speedy and to-the-point solutions. I have been teaching students for 5 years now in different subjects and it's truly been one of the most rewarding experiences of my life. I have also done one-to-one tutoring with 100+ students and help them achieve great subject knowledge. I have expertise in computer subjects like C++, C, Java, and Python programming and other computer Science related fields. Many of my student's parents message me that your lessons improved their children's grades and this is the best only thing you want as a tea...
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Question Posted:
Students also viewed these Corporate Finance questions
-
A company with three product lines has estimated its weekly capacity requirements for three work centers as follows: a. How many workers (and duplicate machines) are needed in each work center if...
-
Line x = 3, z = 1 carries charge 20nC/m while plane x = 2 carries charge 4 nC/m2. Find the force on a point charge 5mC located at the origin.
-
Beta Corp. invested in a three-year, $ 100 face value 8% bond, paying $95.03. At this price, the bond will yield a 10% return. Interest is payable annually. (a) Prepare a bond discount amortization...
-
PERCH FALLS MINRO HOCKEY ASSOCIATION FUND Operating Capital Endowment Cash Inflows: Government grant for operating Costs $162 Government grant for hockey arena $350 Corporate donations for hockey...
-
Dixboro Company manufactures one product and accounts for costs using a job cost system. You have obtained the following information from the corporation's books and records for the fiscal year ended...
-
The Moore Corporation has operating income (EBIT) of $750,000. Its depreciation expense is $200,000. Moore is 100% equity financed. The federal tax rate is 21% (ignore any possible state corporate...
-
Environmental accounting systems have been proposed for sovereign nations as well as for companies. Consider how a macro (national) and a micro (company) view of environmental accounting might differ.
-
In the spring of each year, Steinbrook Colleges theater department puts on a contemporary play. Before the performance, the theater manager instructs student volunteers in their duties as cashier,...
-
A survey of a group of randomly selected students shows the following data comparing the number of hours per week spending on social media apps to their average marks: Hours Marks 11 84 10 5 12 22 3...
-
a. Draw a network showing the different routes troops and supplies may take to reach the Russian Federation from the United States. b. Moscow and Washington do not know when Commander Votachev will...
-
Suppose the cost of capital of the Gadget Company is 10 percent. If Gadget has a capital structure that is 50 percent debt and 50 percent equity, its before-tax cost of debt is 5 percent, and its...
-
Ellwood Corp. has a five-year bond issue outstanding with a coupon rate of 10 percent and a price of $1,039.56. If the bonds pay coupons semiannually, what is the pretax cost of the debt and what is...
-
a) Did the Does move to quash the subpoena only because they sought to block the investigation? b) If those communications were confidential, than why may the Board of Social Work abrogate the Does'...
-
How does HRM relate to other functions within an organization, such as finance and marketing?
-
How the culture spur innovation, Provide the organization identity, community values, planning and development in the American heart association organization.
-
How does Value Engineering contribute to optimizing projects or products by balancing cost and functionality, and what key steps are involved in its systematic approach?
-
How can an organization address potential shortages or surpluses of labor in its workforce?
-
Honey Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $5,000 and is expected to be dr years. Using the straight-line depreciation method, calculate the annual...
-
In a power plant, the generation cost functions of the units are as follows: \[ \left\{\begin{array}{l} C_{1}=0.0075 P_{G 1}^{2}+50 P_{G 1}+1000 \\ C_{2}=0.005 P_{G 2}^{2}+45 P_{G 2}+3000...
-
Listed below are several terms and phrases associated with basic assumptions, broad accounting principles, and constraints. Pair each item from List A (by letter) with the item from List B that is...
-
Find the general solution of the equation dx dx +5- - 9x = 1 dt dt
-
Explain why a swap is effectively a series of forward contracts. Suppose a firm enters a swap agreement with a swap dealer. Describe the nature of the default risk faced by both parties.
-
For the following scenarios, describe a hedging strategy using futures contracts that might be considered. a. A public utility is concerned about rising costs. b. A candy manufacturer is concerned...
-
ABC Company and XYZ Company need to raise funds to pay for capital improvements at their manufacturing plants. ABC Company is a well-established firm with an excellent credit rating in the debt...
-
6. (8 points) A spooky ghost is spotted initially <3, 1 > blocks from a haunted house. After 50 seconds later, the spooky ghost was spotted < -2, -3 > blocks away from the same haunted house. A...
-
Assume a rope of non-negligible mass M, pulls a block of mass M, with a non-zero acceleration on a horizontal frictionless plane. a) Show that if M, < < M,, the tension at each end of the rope is...
-
In outer space, a constant force is applied to a 33.3 kg probe initially at rest. The probe moves a distance of 105 m in 14 s. Part A What acceleration does this force produce? Express your answer in...
Study smarter with the SolutionInn App