1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Serggg [28]
3 years ago
5

Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio'

s beta is 0.65. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 1.50. What would your portfolio's new beta be
Business
1 answer:
agasfer [191]3 years ago
4 0

Answer:

0.68

Explanation:

A portfolio consists of an investment of $7,500

The amount of common stock is 20

The portfolio beta is 0.65

Suppose one of the stock in the portfolio is sold with a beta of 1.0 for $7,500

The proceeds realized is then used to purchase another stock with a beta of 1.50

The first step is the to calculate the change in beta

Change in beta= 1.50-1

= 0.5

The next step is to divide the change in beta by the number of common stock

= 0.5/20

= 0.025

Therefore, the new beta can be calculated as follows

= 0.65+0.025

= 0.68

Hence the new portfolio's beta is 0.68

You might be interested in
Wilson Wonders's bonds have 12 years remaining to maturity. Interest is paid annu- ally, the bonds have a S1,000 par value, and
MAXImum [283]

Answer:

approximate YTM = 12.16%.

Explanation:

the approximate yield to maturity = {coupon + [(face value - market value) / n]} / [(face value + market value) / 2]

approximate yield to maturity = {100 + [(1,000 - 850) / 12]} / [(1,000 + 850) / 2] = 112.5 / 925 = 0.1216 = 12.16%

An investor that purchases this bond at $850 can expect to earn a 12.16% return.

3 0
3 years ago
Employees in an advertising company are well paid, yet they all seem to be lacking interest in work and are demotivated. What no
zysi [14]

the answer here is d

5 0
3 years ago
What’s a commercial bank most likely going to do with your money when you deposit it?
sasho [114]

Answer:

keep it in-store and safe until you take some out and if it's there for a while ( like after a year or 2) they could take out a dollar each week or 5 dollars a month for the space you're taking up

8 0
3 years ago
g Consider the income-expenditure model. Suppose that the marginal propensity to consume is equal to 0.8. A reduction in taxes o
RideAnS [48]

Answer:

increase by 400 billion dollars

Explanation:

marginal propensity to consume = mpc

tax multiplier = -mpc/1-mpc

from our question we were given mpc to be 0.8

-0.8/1-0.8

= -0.8/0.2

= -4

change in output = -4(-100)

= 400 billion dollars

for a $100 tax decrease, output will increase by $100 billion x 4

= $400 billion

3 0
3 years ago
Beverley wants to sign up for time warner cable internet onlnie. she has the option to choose residential or business services.
Sindrei [870]
Choose a different server
6 0
2 years ago
Other questions:
  • Hannah has been researching sales of garden supplies. She wants to show the pattern that sales follow over the course of a year.
    5·2 answers
  • Northwest Delivery Company acquired an adjacent lot to construct a new warehouse, paying $75,000 and giving a short-term note fo
    12·1 answer
  • Wear Ever is expanding and needs $6.8 million to help fund this growth. The company estimates it can sell new shares of stock fo
    6·1 answer
  • At the time of liquidation. Fairchild Co. reported assets of $200,000, liabilities of $120,000, common stock of $90,000, and ret
    13·1 answer
  • The following are the current​ month's balances for Toys​ Galore, Inc. before preparing the trial balance. Accounts Payable $ 5,
    14·1 answer
  • In a lease that is recorded as a finance- sales type lease by the lessor, interest revenue ___________.a. should be recognized o
    13·1 answer
  • A stock _____ is a short combination of letters used to identify the stock of a particular company.
    7·2 answers
  • Marigold Corp. makes an investment today (January 1, 2020). They will receive $72000 every December 31st for the next six years
    11·1 answer
  • Luxere Hotels International, an American company, sells the rights to other hospitality companies globally to open hotels with t
    11·1 answer
  • Which of these is a similarity between being self-employed and owning a business?
    8·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!