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Varvara68 [4.7K]
3 years ago
9

An individual has $20,000 invested in a stock with a beta of 0.4 and another $65,000 invested in a stock with a beta of 1.8. If

these are the only two investments in her portfolio, what is her portfolio's beta
Business
1 answer:
Hitman42 [59]3 years ago
5 0

Answer:

Beta= 1.478

Explanation:

Giving the following information:

An individual has $20,000 invested in a stock with a beta of 0.4 and another $65,000 invested in a stock with a beta of 1.8.

To calculate the portfolio beta, we need to use the following formula:

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)

The proportion of investment:

A= 20,000/85,000= 0.23

B= 65,000/85,000= 0.77

Beta= (0.23*0.4) + (0.77*1.8)

Beta= 1.478

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The overview of the instance would be described throughout the following section.

Explanation:

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Steve borrowed $750 for a new dresser. He made 9 monthly payments to repay the loan. He paid $45 interest. What is his simple in
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Please consider the following explanation

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The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of
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Answer:

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Explanation:

Eco Scenario    Dividend     Stock Price  HPR    Prob     Expected HPR

Boom                         3                 60         26        0.33        8.58

Normal                       1.2               58        18.4       0.33       6.072

Recession                  0.75            49        (0.5)      0.33      <u> (0.165)</u>

              Expected HPR                                                       14.49%

<u>Calculation Of Standard Deviation</u>

                                      (A)                     (B)           (A) - (B)  

P_{1}          P_{0}       D_{1}       Given return   Exp return       d          p           p.d^{2}

60        50      3            26                     14.49         11.51       0.33      43.718    

58        50      1.2          18.4                   14.49         3.91       0.33      5.045

49        50      0.75      (0.5)                    14.49        14.99     0.33      <u> 74.15</u>

                                                                                         Total p.d^{2} =  122.91

wherein, d = deviation

               p = probability

               Standard Deviation = \sqrt{Total\ p.d^{2} }  = \sqrt{122.91} = 11.08  

<u></u>

<u>Working Note</u>:

Holding period return = \frac{P_{1}\ -\ P_{0} \ +\ D_{1}  }{P_{0} }

Boom = \frac{60\ -\ 50 \ +\ 3  }{50 }   = 26%

Similarly, for normal = \frac{58\ -\ 50 \ +\ 1.2  }{50 }  = 18.4%

Recession = \frac{49\ -\ 50 \ +\ 0.75  }{50}  = (0.5)%

figure in bracket indicates negative return

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