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Vlad [161]
2 years ago
13

You have $140,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expect

ed return of 17.6 percent. Stock X has an expected return of 14 percent and a beta of 1.42, and Stock Y has an expected return of 10.0 percent and a beta of 1.18.
How much money will you invest in stock Y?


What is the beta of your portfolio?
Business
1 answer:
dedylja [7]2 years ago
6 0

Answer:

Amount investment in Sock Y = - $126,000

Beta of portfolio = 1.636

Explanation:

Data provided in the question:

Total amount to be invested = $140,000

Stock                          X       Y

Expected return       14%     10%

Beta                          1.42     1.18

Expected return of portfolio = 17.6%

Now,

let the weight invested n stock X be W

therefore,

Weight of Stock Y = 1 - W

thus,

( W × 14% ) + (1 - w) × 10% = 17.6 %

or

14W + 10% - 10W = 17.6%

or

4W = 7.6

or

W = 1.9

Therefore,

weight of Y = 1 - 1.9 = -0.9

Thus,

Amount investment in Sock Y = Total amount to be invested × Weight

= 140,000 × ( - 0.9 )

= - $126,000 i.e short Y

Beta of portfolio = ∑ (Beta × Weight)

= [ 1.42 × 1.9 ] + [ 1.18 × (-0.9) ]

= 2.698 - 1.062

= 1.636

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ivanzaharov [21]

Answer:

Expense $23,000 for 2014

Explanation:

The computation is shown below:

Given that

Amount spent on investigating the TV rental stores is $14,000 in south Carolina

And, the amount spent  on investigating the TV rental stores is $14,000 in Georgia is $9,000

So, the expenses that should be spent in the year 2014 is

= $14,000 + $9,000

= $23,000

The same is to be considered

6 0
2 years ago
Explain how other income streams such as photography and merchandise will be useful for the business. (8)
dolphi86 [110]

Answer:

Income streams such as photography and merchandise will be useful for the business is described below in detail.

Explanation:

The practices of photography are broad and therefore the businesses are extensive. the actuality is that if you are to sustain as an expert photographer today, and if you are to have the sources to proceed with what you are really enthusiastic about, then that often includes being open to, and actively evolving, various income streams, not all of which you will be uniformly passionate about.

7 0
2 years ago
A tremendous flood along the Mississippi River destroys thousands of factories, reducing the nation's capital stock by 5%. What
motikmotik

Answer:

Both employment and the real wage rate would decrease

Explanation:

Given that the capital stock of a nation or country jas a direct impact on such country in terms of savings and investments which directly translates to additional.economic development.

Hence, in this case, when a tremendous flood along the Mississippi River destroys thousands of factories, reducing the nation's capital stock by 5%. What happens to current employment and the real wage rate is that "Both employment and the real wage rate would decrease"

This because there won't be adequate money available to create more employment. And with lease employment opportunities than the available labor, the real wage rate tends to decrease over time.

4 0
3 years ago
7. Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate i
Vadim26 [7]

Answer:

The correct answer is option (A).

Explanation:

According to the scenario, the computation of the given data are as follows:

First, we will calculate the Market risk premium, then

Market risk premium = (Required return - Risk free rate ) ÷ beta

= ( 9.50% - 4.20%) ÷ 1.05 = 5.048%

So, now Required rate of return for new portfolio = Risk free rate + Beta of new portfolio × Market premium risk

Where, Beta of new portfolio = (10 ÷ 18.5) × 1.05 + (8.5 ÷ 18.5) × 0.65

= 0.5676 + 0.2986

= 0.8662

By putting the value, we get

Required rate of return = 4.20% + 0.8662 × 5.048%

= 8.57%

4 0
3 years ago
Year Cash Flow 0 –$ 8,300 1 2,100 2 3,000 3 2,300 4 1,700 What is the payback period for the set of cash flows given above? (Do
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Answer:

3.53 years

Explanation:

The computation of the payback period is shown below:

In year 0 = $8,300

In year 1 = $2,100

In year 2 = $3,000

In year 3 = $2,300

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If we sum the first 3 year cash inflows than it would be $7,400

Now we subtract the $7,400 from the $8,300 , so the amount is  $900 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it

And, the next year cash inflow is $1,700

So, the payback period equal to

= 3 years + $900 ÷ $1,700

= 3.53 years

7 0
3 years ago
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