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olga_2 [115]
3 years ago
7

You hold a diversified portfolio consisting of a $10,000 investment in each of 15 different common stocks (i.e., your total inve

stment is $150,000). The portfolio beta is equal to 1.3 . You have decided to sell one of your stocks which has a beta equal to 1.6 for $10,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.3 . What will be the beta of the new portfolio
Business
1 answer:
yarga [219]3 years ago
7 0

Answer: 1.28

Explanation:

The portfolio beta is a weighted average of the investments in the portfolio.

The new beta will therefore be;

= Portfolio beta - weighted beta of stock being sold + weighted beta of stock to be added

= 1.3 + ( 10,000/150,000 * 1.6) + ( 1.3 * 10,000/150,000)

= 1.3 - 0.11 + 0.09

= 1.28

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You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 30%. The T-bill rate is 6%. Your
Roman55 [17]

Answer:

Explanation:

Expected return of the portfolio is weighted average of the return of the components.

E(R) = w1 * R1 + w2 * R2

E(R) = 65% * 18% + 35% * 6%

E(R) = 11.70% + 2.10%

Expected Return, E(R) = 13.80%

Standard deviation of portfolio is mathematically represented as:

\sigma =\sqrt{w_1^2\sigma _1^2+w_2^2\sigma _2^2+2w_1w_2p_{1,2}\sigma_1\sigma_2}

where

w1 = the proportion of the portfolio invested in Asset 1

w2 = the proportion of the portfolio invested in Asset 2

σ1 = Asset 1 standard deviation of return

σ2 = Asset 2 standard deviation of return

For risk free money market fund, standard deviation = 0 and its correlation with risky portfolio = 0

\sigma  =\sqrt{ (0.65 * 0.30)^2 + (0.35 * 0)^2 + (2 * 0.65 * 0.30*0.35 *0*0)} \\\\= \sqrt{0.038025 +0+0} \\\\ = 0.195

Standard deviation = 19.50%

7 0
3 years ago
Can someone help with this?
bagirrra123 [75]

Answer:

profit

Explanation:

4 0
3 years ago
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One consequence of providing an inaccurate operational definition of the properties we intend to measure is that the measurement
Nana76 [90]
It will be INVALID. because the consequence of providing an inaccurate  operational cannot be
8 0
3 years ago
Lowes has found that women prefer to do larger home-improvement projects with a man, whether a boyfriend, husband, or neighbor.
Romashka [77]
Lowes offers co-ed store clinics for projects like sink installation in this situstion according is the sociocultural segment of the general environment. The sociocultural segmdn involves the values and beliefs in a society.
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2 years ago
On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount
xz_007 [3.2K]

Answer: The answer is 337,5

Explanation:  

First step: The insurance policy was paid for 3 years, we have to know how many months there are in 3 years. We calculate (3 years x 12 months = 36 Months). Then the insurance policy was paid for 36 months.

Second step: The amount paid was $ 1350. We have to know how much corresponds to each month. We calculate (1350/36 months = 37.5 each month)

Third step: We must count the months from April 1 to December 31. It's 9 months.

Fourth step: Multiply the amount of each month by the number of months between April and December (9). We calculate (37.5 x 9 = 337.5)

I hope you find it useful.

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3 years ago
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