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
Natasha2012 [34]
2 years ago
14

You own a portfolio that has a total value of $210,000 and it is invested in Stock D with a beta of .87 and Stock E with a beta

of 1.38. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D
Business
1 answer:
Crazy boy [7]2 years ago
6 0

Answer:

The dollar amount of the investment in Stock D is (x=$156470.59)

Explanation:

Let assume investment in Stock D = $x

Hence investment in Stock E = (210,000-x)

Portfolio beta=Respective betas * Respective investment weights

1= (x/210,000*0.87)  + (210,000-x) /210,000*1.38[Beta of market=1]

(1*210,000) = 0.87x + 289800 -1.38x

290,000=0.87x+289800-1.38x

Hence x=(289800-210,000)/(1.38-0.87)

x= 79,800 / 0.51

x=156470.5882

x=$156470.59

You might be interested in
A fund manager is considering three mutual funds. The 1st is a stock fund, the 2nd is a long-term government and corporate bond
Vinil7 [7]

Answer:

Expected return is: 7.37% and the Standard deviation is: 24.96%

Explanation:

Correlation between fund S&B=0,0667

Standard Deviation of Fund S=41%

Standard Deviation of Fund(B)=30%

E(R) of Stock Fund S=12%

E(R) of Stock Fund B=5%

Covariance between the funds = Standard Deviation of Fund(B) × Standard Deviation of Fund S × correlation between these funds

Cov = 0.41 × 0.30 × 0.0667 = 0.008204

Now minimum variance portfolio is found by applying:

W min(S)=(SDB)^2-Cov(B,S) / ((SDS)^2+(SDB)^2-2Cov(B,S)

W min(S) = 0.338431

W min(B) = 1-0.338431=0.661569

1) E(r)min= 0.338431 × 12% + 0.661569 × 5% = 7.37%

2) Standard Deviation:

SD Min = (Ws^2XSDs^2+Wb^2XSDb^2+2XWsWb*Cov(s,B)^1/2

SDmin=(0.338431^2 × 0.41^2 + 0.661569^2 ×   0.3^2   + 2 × 0.338431 × 0.661569 × 0.008204)^1/2

SDmin=24.96%

8 0
3 years ago
Joan sells new cars at a local dealership. she receives a 25% commission on the profit each car is sold for. last month she sold
Usimov [2.4K]
Okay. So Joan receives 25% commission on the profits of the cars she sells. She got $8,870 on the profit last month. To find the commission, let’s multiply the amount of profit by the percentage. 8,870 * 0.25 is 2,217.5. There. Joan earned $2,217.50 in commission last month.
6 0
3 years ago
In one state, a mortgagee holds legal title to real property offered as collateral for a loan, and the mortgagor retains the rig
True [87]

Answer:

Lein Theory.

Explanation:

Lien theory refers to the theory in which the buyer stops the property deed at the time of the mortgage. Also the buyer promised to pay all the payments so that the mortgage could become a lien on a property but at the same time the  title would remain with the buyer but if all the payments are paid so the lien could be removed

Therefore in the given situation, it represents the lien theory

7 0
3 years ago
Do you pay attention to the price on the stocks on the stock market? Why or why not? Do you think it is beneficial to individual
defon
Yes i do pay attention to the price on the stocks on the stock market, it benefits me to do so because it helps me keep track of my purchase:)
5 0
3 years ago
Read 2 more answers
You are the owner of a small sandwich shop. a buyer may offer one of several payment methods: cash, a check drawn on a bank, a c
Anon25 [30]
A check it takes less time and has no fee and the just draw from my account
6 0
2 years ago
Other questions:
  • Depreciation:
    5·1 answer
  • If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should a. use
    5·1 answer
  • Accountants truly represent the financial managers of a business. <br> a. True <br> b. False
    7·1 answer
  • Global Investments is considering a project that will produce cash inflows of $11,000 in year 1, $24,000 in year 2, and $36,000
    5·1 answer
  • Using your favorite search engine, the resources of your library, and information available on the Uber Web site, identify and e
    11·1 answer
  • On March 31, Dower Publishing discounted a $30,000 note at a local bank. The note was dated February 28 and required the payment
    9·1 answer
  • A government budget deficit affects the supply of loanable funds, rather than the demand for loanable funds, because a. in our m
    12·1 answer
  • ABC Corporation has noticed the following transactions havent been account for in its income statement for the year ended Decemb
    10·1 answer
  • How to reply to brand collaboration
    9·1 answer
  • The ___________________Party believes in individual freedom and that the only purpose of government is to protect this freedom.
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!