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chubhunter [2.5K]
3 years ago
14

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the proces

s of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 13.0% and a beta of 1.50. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? Group of answer choices 11.20%; 1.23 12.97%; 1.42 12.35%; 1.36 10.64%; 1.17 11.76%; 1.29
Business
1 answer:
sergey [27]3 years ago
7 0

Answer:

The expected return and beta on the portfolio be after the purchase of the Alpha stock will be 11.20%; 1.23

Explanation:

Provided data;

90000 value portfolio with expected returns of 11% and beta of 1.20

($10 × 1000) = 10000 value Alpha Corp added with expected returns of 13% and beta of 1.50.

The new expected portfolio return =

rp = 0.1 × 13% + 0.9 × 11%

rp = 0.1 × 0.13 + 0.9 × 0.11

= 11.20%

The new expected portfolio beta =

bp = 0.1 × 1.50 + 0.9 × 1.20

bp = 1.23

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The correct options are "A, C, and D".

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  • GAAP becomes regarded as a relatively 'rules-based' management framework, seems to be the accounting technique used throughout the United States
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"A process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade
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the common stock of salazar insurance pays a constant annual dividend of $4.80 per share. what is one share of this stock worth
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Market Price =$36.09,is one share of this stock worth at a discount rate of 13.3 percent.

<h3>Common stock: What does that mean?</h3>

A security that symbolizes ownership in a firm is called common stock. Common stock owners choose the executive board and cast ballots for corporate rules. This kind of stock ownership frequently offers better long-term rates of return. Common stock is not subject to either assets or liabilities.

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<h3>Briefing:</h3>

Market price = dividends per share

P0 = $4.80/.133

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Market Price =$36.09

To know more about common stock visit:

brainly.com/question/13762106

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