Question: Problem 8-2 : Beta of portfolio is the weighted average of betas of stocks in the portfolio Stock A: $20,000 0.6 Stock B: $75,000 2.5

Problem 8-2

: Beta of portfolio is the weighted average of betas of stocks in the portfolio

Stock A: $20,000 0.6 Stock B: $75,000 2.5 Total Investment: $95,000 Portfolio Beta: 2.1

Problem 8-7

Calculate the Beta of the portfolio using weighted average formula; then apply SML formula Stock Investment Beta A $460,000 1.5 B $500,000 -0.5 C $1,260,000 1.25 D $2,600,000 0.75

Total Investment: $4,820,000 Portfolio Beta: 0.822614108 0.82 risk-free rate: 4% market rate: 8% Required Return: 7.2800%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Hermosa, Incorporated produces one model of mountain bike. Partial information for the company follows: Required: Complete the table. Calculate Hermosa's contribution margin ratio and its total...

CHAPTER 6 . The Meaning and Measuremer 6-18. (Required rate of return using CAPM) a. Compute an appropriate rate of return for Intel common stock, which has a beta of 1.2. The risk-free rate is 2...

I need question one answered. Attached are documents from the chapter to help add in the question. A 1 D E F Final Examination FINC 5880 3 5 6 7 8 9 10 11 C Question 6. (15 points) Your portfolio is...

MGMT 640 Midterm Exam Ques. 1) Which of the following is not an advantage of the corporate form of business organization? a. Sell debt or equity in public capital markets b. Owners have limited...

can you please answer #45 and #56? it is from the same document from before. Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement...

45. Luther Industries has a dividend yield of 4.5% and a cost of equity capital of 12%. Luther Industries' dividends are expected to grow at a constant rate indefinitely. The growth rate of Luther's...

an investment will $205,000 at the end of next year for an investment of $183,000 at the start of the year. If the market interest rate is 8% over the same period, should the investment be made?...

please see question 53 about the amount owed in taxes the following year. Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or...

Answer the 11 questions for the attached valuation project.Provide high level analysis and support by excel calculations. Please suggest a reasonable price. Thank you Provide high level analysis and...

Hi, I have an Assignment for my Finance Subject. I have attached the necessary documentation here for you to view including the Lecture slides of all the Topics covered for this assignment. Please...

2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk and Rates of Return: Risk in Portfolio Context The capital asset pricing model (CAPM) explains how risk should be considered when stocks...

Geography Coastal lab Questions for Map T-15 "Point Reyes, CA" Point Reyes National Seashore lies north of San Francisco on the California coast. Point Reyes consists of resistant bedrock that is...

Discuss some of the reasons why strategy evaluation is becoming increasingly difficult with the passage of time.

A stock has above - average risk if its:standard deviation 1 . 0 ALL of the choicescorrelation 1 . 0 beta 1 . 0

The following information pertains to Boone Company for 2009. Beginning inventory 70 units @ $26 Units purchased 280 units @ $30 Ending inventory consisted of 30 units. Boone sold 320 units at $40...

A mixture of 75 mole% propane and 25 mole% hydrogen is burned with 25% excess air. Fractional conversions of 90% of the propane and 85% of the hydrogen are achieved: of the propane that reacts. 95%...

An adiabatic heat exchanger is to cool ethylene glycol (cp = 2.56 kJ/kg C) flowing at a rate of 2 kg/s from 80 to 40C by water (cp = 4.18 kJ/kg C) that enters at 20C and leaves at 55C. Determine...

A device used to measure the surface temperature of an object to within a spatial resolution of approximately 50 nm is shown in the schematic. It consists of an extremely sharp-tipped stylus and an...

The following financial data were reported by 3M Company for 2008 and 2009 (dollars in millions). Instructions(a) Calculate the current ratio and working capital for 3M for 2008 and 2009.(b) Suppose...

Identify the correctly punctuated sentence below. Selected answer will be automatically saved. For keyboard navigation, press up / down arrow keys to select an answer. When I explained my predicament...

3. One of the books most powerful questions is What would you do if you were not afraid? As you look to your future and grasp the attitudes Spencer Johnson suggests, share your answer to that...

1. The first Stew Leonards retail grocery was established in 1969. Do you think the culture established and nurtured at this successful firm could be adopted by other retail grocery stores? Explain...

3. Would you like to work at a Stew Leonards retail store? Develop your rationale for employment or nonemployment.