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
blondinia [14]
3 years ago
5

You have $100,000 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 12.1 percent. Stock X has an expected return of 10.28 percent and a beta of 1.20, and Stock Y has an expected return of 7.52 percent and a beta of .80.
a. How much money will you invest in Stock Y? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
a. Investment in Stock Y
b. Portfolio beta
Business
1 answer:
____ [38]3 years ago
5 0

Answer:

a. Amount to invest in Y

The amount that will be invested in Stock Y should be such that the expected return of the portfolio would equal 12.1%.

This would be determined by the weights of the stock.

Assume the weight to be invested in X is x.

Portfolio return = (weight of X * Return of X) + (weight of Y * Return of Y)

12.1% = (x * 10.28%) + ( (1 - x) * 7.52%)

0.121 = 0.1028x + 0.0752 - 0.0752x

0.121 - 0.0752 = 0.1028x - 0.0752x

0.0458 = 0.0276x

x = 0.0458 / 0.0276

= 1.6594

Weight in stock Y:

= 1 - 1.6594

= -0.6594

Amount to invest in Y:

= -0.6594 * 100,000

= -$65,940

b. Portfolio beta

It will be a weighted average of the betas of the two stocks:

= (Weight of stock X * Stock X Beta) + ( Weight of stock Y * Stock Y beta)

= (1.6594 * 1.20) + (-0.6594 * 0.80)

= 1.46

You might be interested in
Out of 100% what is the percentage of her getting a bf
Papessa [141]

Answer:

78%

Explanation:

because I said so.....

8 0
3 years ago
Read 2 more answers
Why is important business plan ensure the success of the business ​
vlada-n [284]

Answer:

because it's will Ganna give you a business

8 0
3 years ago
Read 2 more answers
Which gas is a natural source of groundwater pollution​
marissa [1.9K]
Radon Gas - it’s a radioactive product of the decay of natural occurring uranium in earths crust.
3 0
3 years ago
On December 31, 2012, Albacore Company had 300,000 shares of common stock issued and outstanding. Albacore issued a 10% stock di
slamgirl [31]

Answer:

Option (D) 327,000

Explanation:

Data provided in the question:

Shares of common stock issued and outstanding = 300,000

Stock dividend issued = 10%

Shares of common stock reacquired as treasury stock = 12,000

Duration from June 30, 2013 to September 30, 2013 = 3 months

= 0.25 years

Now,

Appropriate number of shares to be used in the basic earnings per share computation for 2013 will be

= [ 300,000 × ( 1 + 0.10 ) ] - [ 12,000 × 0.25 ]

= 330,000 - 3,000

= 327,000

Hence,

Option (D) 327,000

6 0
3 years ago
Today, if John’s computer stops operating correctly, he probably calls a computer repair technician to fix it. The computer repa
kotykmax [81]

Answer:

Organic Solidarity

Explanation:

Based on the information provided within the question it can be said that this is an example of a term known as Organic Solidarity. This term explains the union in society from individuals depending on one another in advanced societies, where this interdependence usually occurs from the specialization of work between individuals. Such as John needing to depend on a computer repair technician to fix his computer.

7 0
3 years ago
Read 2 more answers
Other questions:
  • Stevens Company's inventory on March 1 and the costs charged to Work in Process—Department B during March are as follows:
    10·1 answer
  • In countries with minimal corruption ________. the contribution of the private sector to the national GDP is negligible financia
    8·1 answer
  • A monopolistically competitive firm chooses A. price, but output is determined by a cartel production quota.B. the price, but co
    14·1 answer
  • If you had $1,000 to invest into the following funds, which one would have the highest value (not including any fees) at the end
    6·1 answer
  • True or false: When you receive a savings bond worth $100, you can cash it for $100 right away.
    7·2 answers
  • What is the maximum percentage of net spendable income that should be set aside for transportation
    5·2 answers
  • Long-term debt ratio 0.3
    14·1 answer
  • Which ones go in which box
    15·1 answer
  • Explain why the bank has asked to see your business financial records?​
    7·1 answer
  • La factura debe tener preimpreso la denominación
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!