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lisabon 2012 [21]
3 years ago
9

Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.

25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35. What would the portfolio's new beta be?
Business
1 answer:
lyudmila [28]3 years ago
3 0

Answer:

1.29375

Explanation:

Data provided in the question:

Total investment = $10,000

Number of different common stock = 8

Portfolio's beta = 1.25

Beta of a stock sold = 1.00

Beta of the replacement stock = 1.35

Now,

Change in portfolio beta = weight × (change in security beta)

also,

change in security beta

= Beta of the replacement stock - Beta of a stock sold

= 1.35 - 1

= 0.35

and,

Weight = Beta ÷ Number of different common stock

= 1 ÷ 8 = 0.125

Therefore,

Change in portfolio beta = 0.125 × 0.35

= 0.04375

thus,

New portfolio beta = Portfolio's beta + Change in portfolio beta

= 1.25 + 0.04375

= 1.29375

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Explanation:

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In cases were one is successful, the person should incorporate what has been learned from the test into broader changes.

The "act" part of the PDCA cycle is used to perform in-between meeting tasks.

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3 years ago
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Solution:

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7 0
2 years ago
On January 1, Year 1, Ballard company purchased a machine for $28,000. On January 1, Year 2, the company spent $7,000 to improve
timofeeve [1]

Answer:

$23,520

Explanation:

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Less: Depreciation                    $4,200

($28,000 - $2,800) ÷ 6

Book Value at beginning

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Less: Accumulated

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3 0
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Answer:

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III. Mission.

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