Answer:
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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 process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 21.5% and a beta of 1.70. 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? Do not round your intermediate calculations.
Old portfolio return
11.0%
Old portfolio beta
1.20
New stock return
21.5%
New stock beta
1.70
% of portfolio in new stock = $ in New / ($ in old + $ in new) = $10,000/$100,000=
10%
New expected portfolio return = rp = 0.1 × 21.5% + 0.9 × 11% =
12.05%
New expected portfolio beta = bp = 0.1 × 1.70 + 0.9 × 1.20 =
1.25
Explanation:
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Smith's best - known ideas formed the basis of economic theory , including the invisible hand theory ( the idea that free - markets coordinate themselves ) , the division of labor ( the idea that people should specialize in specific tasks ) , and the measurement of economic activity ( Gross Domestic Product ) .
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In the given scenario, Rembrandt Cosmetics accomplished its substitution primarily through strategic planning of equivalence.
<h3>What is strategic planning?</h3>
When the differences between two different strategic plans are identical, with other things being constant, such a situation is called as a strategic planning of equivalence.
Hence, strategic planning holds true regarding the given situation.
Learn more about strategic planning here:
brainly.com/question/16699515
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Answer:
6.35%
Explanation:
you can use the yield to maturity formula to determine the coupon:
YTM = {coupon + [(face value - market value) / n]} / [(face value + market value) / 2]
0.065 = {coupon + [(1,000 - 984.56) / 15]} / [(1,000 + 984.56) / 2]
0.065 = {coupon + 1.029} / 992.28
64.4982 = coupon + 1.029
coupon = 63.47
coupon rate = 63.47 / 1,000 = 0.06347 = 6.35%