1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
notka56 [123]
3 years ago
6

You have $106,000 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 16 percent. Stock X has an expected return of 13 percent and a beta of 1.14, and Stock Y has an expected return of 9.0 percent and a beta of .84.
How much money will you invest in stock Y? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign.)
Investment in Stock Y $
What is the beta of your portfolio? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.)
Beta of the portfolio
Business
1 answer:
Helga [31]3 years ago
6 0

Answer:  ER(P) = ERX(WX) + ERY(WY)

                   16 = 13(1-WY)  + 9(WY)

                    16 = 13 - 13WY + 9WY

                    16 = 13 - 4WY

                   4WY = 13-16

                   4WY = -3

                     WY = -3/4

                     WY = -0.75

                     WX = 1 - WY

                     WX = 1 - (-0.75)

                     WX = 1 + 0.75

                     WX = 1.75

 The amount to be invested in stock Y = -0.75 x $106,000

                                                                    = -$79,500

The Beta of the portfolio could be calculated using the formula:

                     BP = BX(WX) + BY(WY)

                     BP = 1.14(1.75) + 0.84(-0.75)

                     BP = 1.995 - 0.63

                     BP = 1.365

Explanation: The expected return of the portfolio is equal to expected return of stock X multiplied by the weight of stock X plus the expected return of stock Y multiplied by weight of security Y. The weight of security Y is -0.75. The weight of security X is equal to 1 - weight of security Y. Thus, the weight of security X is 1.75 since the weight of security Y is negative. The amount to be invested in security Y is -0.75 x $106,000, which is equal to -$79,500

The Beta of the portfolio equals Beta of stock X multiplied by weight of stock X plus the Beta of stock Y multiplied by weight of stock Y. The weights of the two stocks have been obtained earlier. Therefore, the Beta of the portfolio is 1.365.

You might be interested in
According to the video, what are the two other most important ways banks make money?
marysya [2.9K]

Even though I didn't see the video mentioned in the question, banks make most of their money through banking fees and investments.

4 0
3 years ago
12.The competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making A. entails little or no s
Vladimir [108]

Answer:

D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

Explanation:

A think global act local is a strategic business approach or concept which is aimed at achieving a low cost, effective cost, efficiency and focused strategy theme in all the locations where the firm has its operations but nonetheless avails local managers the opportunity and ability to adjust product

specifications, distribution and marketing channels to better satisfy local consumers, as well as effectively and efficiently match local market conditions.

Hence, the competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

8 0
3 years ago
Shay is preparing to go into her meeting with her supervisor, Jill, to discuss her annual evaluation. She knows that there have
Rzqust [24]

Shay is preparing to go into her meeting with her supervisor, Jill, to discuss her annual evaluation. She knows that there have been a few times this year where she could have performed better and she does not want to get angry in the meeting. Last night and on the ride in this morning, she rehearsed what she anticipated Jill would tell her and what her response would be. Shay was trying to  resist being defensive - True

<h3><u>Explanation:</u></h3>

The word Resist refers to the act of  withstanding  the action or effect of something. An act that is done with an  intention to protect oneself or defend from the challenge or avoiding criticism is defensive. When we do something wrong or when we are in a situation to avoid criticism by others who may be our co workers we tend to defend our self.

When we are having confidence in  the things that we do then we will try top resist what others says by explaining them the actual thing. In the given scenario, Shay is preparing how to answer the questions that Jill shoots in the meeting because he has the confidence in the work she performed. Thus, Shay is trying to resist Jill than being defensive.

4 0
3 years ago
2. At which inventory level is operations management considered to be doing an excellent job? A. Above the minimum level B. Abso
BigorU [14]
I would say D. because that is what they want
4 0
3 years ago
Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflat
DENIUS [597]

Answer:

23.3%

Explanation:

Expected return refers to the anticipated profit or loss of financial investment. Essentially, it's the value of the return that investors anticipate. We can find the expected return by using the formula given below

Δ IR = 5-5% - 2% = 3.5%

Δ IP = 6% - 4% = 2%

Formula

Expected return = Expectedreturn(previous year) + (betaIP x Δ IP) + (betaIR x Δ IR)

Expected return = 12% + (2.5 x 2%) + (1.8 x 3.5%)

Expected return = 23.3%

5 0
3 years ago
Other questions:
  • Fill in the blank label in the above figure. A. Margin B. Cleave C. Bridge D. Gap
    8·2 answers
  • With respect to their impact on aggregate demand for the U.S. economy, which of the following represents the correct ordering of
    13·1 answer
  • Aubrey uses her credit card to buy some clothes for $552.86. She can pay up to $195 on the credit card each month. What is the t
    5·1 answer
  • The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a
    14·1 answer
  • Which factor is typically not a requisite feature of setting a career goal?
    13·1 answer
  • A manager who always achieves the tasks given to him or her, uses verbal putdowns and poor performance evaluations to motivate e
    14·1 answer
  • A(n) ________________ is a number of currency units, shares, bushels, pounds, or other units specified in a derivative instrumen
    6·1 answer
  • XYZ Manufacturing reported the following:
    13·1 answer
  • Suppose ABC Bank offers to lend you $1,000 at a nominal rate of 8%, compounded monthly. The loan (principal plus interest) must
    13·1 answer
  • Omega has a real gdp per capita of $5,000. If it has a constant 6% rate of growth. how many years will it take before omega has
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!