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eduard
3 years ago
7

Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio'

s beta is 1.31. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 0.97. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places.
Business
1 answer:
MA_775_DIABLO [31]3 years ago
4 0

Answer:

The new portfolio beta is 1.31 rounded off to two decimal places.

Explanation:

The portfolio beta is a function of the sum of the weighted average betas of the individual stock's that form up the portfolio. The portfolio beta is calculated using the following formula,

Portfolio beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N

Where,

  • w is the weightage of each stock in the portfolio

The beta of the portfolio when one stock with a beta of 1 is sold is,

The sum of individual stock betas for 19 stocks is = 20 * 1.31  -  1 * 1  = 25.2

The new portfolio beta when one stock with a beta of 0.97 is added is,

Portfolio beta = (25.2 + 0.97) / 20

Portfolio beta = 1.3085 rounded off to 1.31

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Question Completion:

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O While it is true that some competitive factors affect the brand choices of buyers more than others, what matters most in determining sales and market shares is competitive effort and the regional average on each competitive factor

O How much differences in the number of models/styles that companies have in their product lines matter in determining each company's unit sales/market share in a region is not a fixed amount but rather is an amount that varies from *big (when model/style differences are also "big") to "small  

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O Big company-to-company differences in the number of models/styles offered to buyers in a region weigh heavily in accounting for company-to-company differences in branded pairs sold and market share in all four geographic regions.

Answer:

The statements about the importance of each competitive factors (but especially such highly influential factors as selling prices, S/Q ratings, and number of models/styles offered) in determining company sales volumes and market shares in a particular geographic region which is false is:

O Tiny cross-company differences on a highly influential competitive factor (like selling prices, or S/Q ratings or models/styles) nearly always have a bigger impact on company sales/market shares in a region than do large company-to-company differences on less influential competitive factors.

Explanation:

This implies that the following factors drive company sales volumes and market shares in a particular geographic region: competitive effort, differences in the number of models/styles that companies have in their product lines, big company-to-company differences in the number of models/styles offered to buyers in a region, among the other 12 competitive factors.

4 0
3 years ago
Anders industries currently holds two debts: an $11,000 debt due in 12 months and a $16,000 debt due in 18 months. anders prepar
lianna [129]
All $27,000 in debt should be classified as current liabilities. Since the current liabilities section of the balance sheet encompasses obligations that are due to be fulfilled in the near term, and includes amounts relating to accounts payable, incomes, utilities, taxes, short-term loans, and so forth.  Current liabilities are debts that are due to be compensated within one year or the operating cycle, whichever is longer.
7 0
3 years ago
just paid an annual dividend of $3.00 per share last year. Management just announced that future dividends will increase by 2 pe
Misha Larkins [42]

Answer: $3.31

Explanation:

Dividends will increase by 2% so using a future value formula would show the amount of dividends in year 5.

= 3 * ( 1 + 2%)⁵

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7 0
3 years ago
If a 25 percent decrease in the price of sapphires causes a 15 percent decrease in the quantity of diamonds demanded, then the c
natta225 [31]
To solve for the cross-price elasticity of demand:
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4 0
3 years ago
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QveST [7]

Answer:

b. $2.50

Explanation:

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                                = $2.50

Therefore, The dividend per share should it declare is $2.50

4 0
3 years ago
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