Thomas has a five-stock portfolio that has a market value equal to $400,000. The portfolios beta is
Question:
Thomas has a five-stock portfolio that has a market value equal to $400,000. The portfolio’s beta is 1.5. Thomas is considering selling a particular stock to help pay some university expenses. The stock is valued at $100,000, and if he sells it, the portfolio’s beta will increase to 1.8. What is the beta of the stock Thomas is considering selling?
PortfolioA portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Step by Step Answer:
old 15 portfolio value 400000 of the four stocks that remain after sel...View the full answer
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
Students also viewed these Corporate Finance questions
-
You are a consultant to a large manufacturing corporation considering a project with the following net after-tax cash flows (in millions of dollars) Years from Now After-Tax CF 0 -20 1-9 10 10 20 The...
-
NOTES PAYABLE ENTRIES Milo Radio Shop had the following notes payable transactions: Apr. Borrowed $5,000 from Builder's Bank, signing a 90-day, 8% note. 5 Gave a $2,000, 60-day, 7% note to Breaker...
-
5. (20pts) What is the conversion factor for pressure from ki to MPa? Show work. Express as in the FE manual's units table, "Multiply ksi by (number) To Obtain (MPa)."
-
The data below are the calories and grams of sugar in some popular store bought cookies. Calories 143 Grams of Sugar 12 97 9 200 11 149 19 84 4 57 9 198 21
-
What is the difference between a positive externality and a negative externality? Describe an example of each.
-
The large magnetic fields used in MRI can produce forces on electric currents within the human body. This effect has been proposed as a possible method for imaging biocurrents flowing in the body,...
-
Natural Cosmetics Pty Ltd has provided the following planned per-unit cost and sales data for the year ended 30 June 2026. Fixed factory overhead costs are \($1\) 056 000 per year, and the annual...
-
In 2011, Troy wins the Connecticut Lotto grand prize of $15 million. The Lotto contest is governed by the following rules. The prize money is to be paid in 20 equal annual installments (in this case,...
-
1. Write a paragraph about the "Fermi Paradox". 2. Define the Megawatt, Gigawatt and Terawatt units of power. Access the internet to determine the latest available figure of total global power...
-
Grundvig Manufacturing produces several types of bolts used in aircrafts. The bolts are produced in batches and grouped into three product families. Because the product families are used in different...
-
Yesterday, Susan determined that the risk-free rate of return, rRF, is 3 percent, the required return on the market portfolio, rM, is 10 percent, and the required rate of return on Stock K, rK, is 17...
-
Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 15 percent, and the risk-free rate of return is 9 percent. By how much does the required...
-
Heritage Hills (a land development firm) was organized on July 2, 1975, as a limited partnership, but the partnership agreement was never properly filed. Heritage Hills went bankrupt, and the...
-
Do you notice when your favorite restaurant or coffee shop changes the size of its portions? If so, does it impact your purchasing behavior? Why or why not?
-
Tom sold mutual fund share he had owned 3 years so that he could use the precedes to return to college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were $64,300. How...
-
Consider an Sn2 reaction of NaSH in a polar aprotic solvent with (CH3)2CHCH2CH2X. What would be the relative order of reactivity for the following X substituents? I. X= I II. X=Br III. X=Cl IV. X=F...
-
Find fx (x,y) and f (x,y). Then, find fx (3,-2) and f,(-3,4). f(x,y) = 8xy + 8y +1 fx(x,y)= fy(x,y)=[ f(3,-2)= (Simplify your answer.) fy(-3,4)= (Simplify your answer.)
-
Joe and Lisa have engaged in a two-year consensual personal relationship which ends. Joe continues to attempt to get Lisa to go out with him on dates. When she does not, she is eventually fired by...
-
A solution of a nonvolatile solute in water has a boiling point of 375.3 K. Calculate the vapor pressure of water above this solution at 338 K. The vapor pressure of pure water at this temperature is...
-
A fast-food restaurant averages 150 customers per hour. The average processing time per customer is 90 seconds. a. Determine how many cash registers the restaurant should have if it wishes to...
-
You are a polluter who is faced with the question of whether to comply with the regulations on emissions or to violate them. If you comply with the regulations, your costs are \(k\). If you do not...
-
What are the three primary ways enterprises use their management accounting information?
-
Why does management accounting information need to be timely?
-
Is management accounting information primarily historical or future oriented? How does that compare with financial accounting information?
-
In what ways does HR assist managers in handling employee performance issues or conflicts within their teams? What role does HR play in helping managers navigate challenges related to allegations and...
-
Why is A/B testing so useful for marketing, and digital marketing in particular? Give at least two examples of A/B testing for marketing purposes. Give a null and alternative hypothesis for one of...
-
Define the following sets (30 points) (a) X = {(x, y) = R: y = f(x) = 3x + 3y 42} =1 (b) Y={(x, y) = R: y = f(x) = 2x + 2y 42} (c) Z = XUY (d) Prove whether or not each set defined above is convex?
Study smarter with the SolutionInn App