Answer:
average beta of the new stocks to achieve the target required rate of return is 2.29
Explanation:
given data
Portfolio amount invested = $40,000,000
Beta = 1
Risk free rate = 4.25%
Market risk premium = 6%
Hazel expects = $60 million
expected return new investments = 13.00%
to find out
average beta of new stocks be to achieve the target required rate of return
solution
we will use here CAPM formula that is
Expected return = Risk free rate + Beta × Market risk premium .........1
put here value we get
13% = 4.25% + Beta × 6%
0.06 × Beta = 13% - 4.25%
Beta = 1.458
now we get Weighted beta that is express as
Weighted beta = weight of old stock in new portfolio × 1 + Weight of new stock in new portfolio × beta of new stock ..................2
put here value we get
1.458 =
solve it we get
beta = 2.29
so that average beta of the new stocks to achieve the target required rate of return is 2.29
B i think hope this helps tell me if im wrong or right
Answer:
(A) unrelated diversification
Explanation:
- The unrelated diversification s a form of diversification that that to the forms of business when they adds up unrelated new products and new lines and penetrates the newer markets.
- An example of cake makers entering a furniture market. Thus relates to different and non-related spheres of functioning.
I believe the answer is internal capacity.
In business terms, internal capacity refers to the resources tha exist within company's staffs/employees which can contribute to the growth of the company.
In order to obtain this resources, company could take several approach such as investing in employees skill training and encouraging employees to share their ideas.