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velikii [3]
3 years ago
14

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.16 and the total

portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio
Business
1 answer:
raketka [301]3 years ago
8 0

Answer:

Beta of stock A (βA) = 1.16

Beta of stock B (βB) = ?

Beta of the portfolio (βP) = 1

Weight of stock A (WA) = 50% = 0.50

Weight of stock B (WB) = 50% = 0.50

β(P) = βA(WA) + βB(WB)

1    =  1.16(0.50) + βB(0.50)

1    = 0.58 + 0.50βB

1 - 0.58 = 0.50βB

0.42 = 0.50βB

<u>0.42</u>  = βB

0.50

βB = 0.84

Explanation:

Beta of a portfolio equals beta of stock A multiplied by weight of stock A plus beta of stock B multiplied by weight of stock B. The beta of the portfolio is 1 because the portfolio is as risky as the market. Beta of stock A has been provided. The weight of stock A and stock B are 50% respectively because equal amount of fund is invested in each security.

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Answer:

A. True

Explanation:

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Imagine that in 2019 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some ti
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In the short-run, the effect on the price level and the real GDP is <em>a. Both the </em><em>price level </em><em>and </em><em>real GDP </em><em>rise.</em>

Since the economy is in long-run equilibrium in 2019, and the stock prices unexpectedly rise and stay high for a long time, it means that the price level does not:

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<u>Question Options</u>:

a. both the price level and real GDP rise.

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2 years ago
Which of the following behavior patterns may be a characteristic of minors
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Self conscious about appearance

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Why do we need to do school when at home bc this is supposed to be my vaca...
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Zero- there is a $10 Million exemption equivalent ( d )

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