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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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3 years ago
An investor bought a one-acre lot on the outskirts of a city for $12,700 cash. Each year she paid $175 of property taxes. At the
german

Answer:

79.5%.

Explanation:

Rate of return = \frac{final value - initial value}{initial value} x 100

The cost of the acre = $12700.

Total property taxes paid for 7 years = $175 x 7

                                                             = $1225

Net value of cost = $12700 + $1225

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Net value of the land when sold = $25000

∴ Rate of return = \frac{25000 - 13925}{13925} x 100

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The rate of return of the acre of land is 79.5%.

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2 years ago
To explain the analogous relationship between the trail and the hike to the plant and inventory Alex makes the following stateme
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Answer:

True

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1 year ago
If you discover a data breach you should immediately notify the proper authority and also:.
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If the data breach poses an excessive hazard then we have to notify the proper authority and also to the ones people affected then they ought to be informed.

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