3. Assume that you hold a well-diversified portfolio that has an expected return of 10.0% and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
3. Assume that you hold a well-diversified portfolio that has an expected return of 10.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Bridge Corp at $10 a share and adding it to your portfolio. Bridge Corp has an expected return of 21.5% and a beta of 1.70. The total value of your current portfolio is $100,000. What will the expected return and beta on the portfolio be after the purchase of the Bridge stock? Do not round your intermediate calculations. 3. Assume that you hold a well-diversified portfolio that has an expected return of 10.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Bridge Corp at $10 a share and adding it to your portfolio. Bridge Corp has an expected return of 21.5% and a beta of 1.70. The total value of your current portfolio is $100,000. What will the expected return and beta on the portfolio be after the purchase of the Bridge stock? Do not round your intermediate calculations.
Expert Answer:
Answer rating: 100% (QA)
Heres how to calculate the expected return and beta of the portfolio after purchasing the Bridge sto... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Assume that the number of customers who arrive at a water ice stand follows the Poisson distribution with an average rate of 6.4 per 30 minutes. What is the probability that three or four customers...
-
13. What is a lower bound for the price of 3-month call option on a non- dividend-paying stock when the stock price is $50, the strike price is $45, and the 3-month risk-free interest rate is 8%?...
-
Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...
-
Sodium sulfate, Na2SO4 with a mass of 15 g is dissolved in 250 g water. What is the boiling point of the solution? Kb for water = 0.52 C/m a) 100 C b) 100.2 C c) 99.67 C d) 101.2 C c) d) O a) b)
-
The following information was reported in Nenshi Company's general ledger at September 30: All sales were made on account. Bad debt expense is estimated to be 1% of sales. Instructions Determine the...
-
A trucking firm delivers appliances for a large retail operation. The packages (or crates) have a mean weight of 300 lb and a variance of 2500. a. If a truck can carry 4000 lb and 25 appliances need...
-
Prove (without using the following Proposition!) that the process \(\left(\int_{0}^{t} N_{s-} d M_{s}, t \geq 0 ight)\) is a martingale, and that the process \(\int_{0}^{t} N_{s} d M_{s}\) is not a...
-
The Mauldin Company makes sales on which a 5% sales tax is assessed. The following summary transactions were made during 2007: 1. Sales for cash of $1,665,400, excluding sales taxes 2. Sales on...
-
Davis Pizza is analyzing the prospect of purchasing an additional fire-brick oven. The oven costs $200,000 and would be depreciated straight-line to a salvage value of $120,000 in ten years. The...
-
The local Chamber of Commerce would like to estimate theaverage price of 93 octane gasoline for Chester County. There arecurrently 86 gas stations operating in the county. A random sampleof 15...
-
What's the rate of return you would earn if you paid $1,500 for a perpetuity that pays $100.65 per year?
-
4. (a) Convert (3, 3) into polar coordinates. = (b) Determine if the following vectors are parallel, orthogonal, or neither and calculate the magnitude of both of the vectors. "a (5,-7,12), b =...
-
If the Thai Baht and USD exchange rate at t=0 is X THB/USD THB/USD = 27.14 and then one year later 25.65, by how many percent did the THB appreciate/depreciate against the USD?
-
In 2007, Gina's employer granted her 2,000 options to buy common shares of the firm. The options had an exercise price of $5 each and were issued at a time when the shares were worth $5 each. In...
-
If XINR/USD = 57.47and then one year later X XINR/USD 63.48, by how many percent did the USD appreciate/depreciate against the INR?
-
Suppose your expectations regarding the a stock return are as follows: State of the Market Probability HPR (including dividends) Boom 0.20 45% Normal growth 0.45 15% Recession 0.35 20% Compute the...
-
Teasdale Inc. manufactures and sells commercial and residential security equipment. The comparative unclassified balance sheets for December 31, 2015 and 2014 are provided below. Selected missing...
-
A senior management team at Rail cam, a supplier to the railway industry, is trying to prepare a cash flow forecast for the years 20X2-20X4. The estimated sales are: These sales will be made on three...
-
a. Tear plc has not paid a dividend for 20 years. The current share price is 580p and the current share market index level is 3,100. Calculate total shareholder returns for the past three years, the...
-
Adam, a speculator, is convinced that the stock market will fall significantly in the forthcoming months. The current market index (14 August) level is 4997 (FTSE 100). He is investigating a strategy...
-
The median is different from 120. An analysis of the data reveals that there are 35 minus signs and 28 plus signs. Use the sign test to test the given alternative hypothesis at the \(\alpha=0.05\)...
-
According to Colliers International, the median monthly parking rate in the United States for 2012 was \(\$ 164.80\). The data in Table 7 represent a random sample of monthly parking rates in...
-
Hypotheses: \(H_{0}: M_{D}=0\) versus \(H_{1}: M_{D} eq 0\) with \(n=23, T_{-}=65\), and \(T_{+}=121\). Use the Wilcoxon matched-pairs signedranks test to test the given hypotheses at the...
Study smarter with the SolutionInn App