What must be the beta of the new stock

Assignment Help Financial Management

Reference no: EM13937534

Your portfolio contains 10 stocks which are held in equal amounts. The portfolio beta is 1.66. The beta of one of the ten stocks (let’s call it stock A) is 2.20. You wish to lower the portfolio beta to 1.50 by selling all of stock A and replacing it with a new stock. In order to create a new portfolio beta of 1.50, what must be the beta of the new stock?

Reference no: EM13937534

Questions Cloud

Calculate the default risk premium on bonds : NikkiG’s Corporation’s 10-year bonds are currently yielding a return of 6.75 percent. The expected inflation premium is 1.15 percent annually and the real risk-free rate is expected to be 2.50 percent annually over the next ten years. Calculate the d..

Describe likely effect on demand curves for office visits : Describe the likely effect on demand curves for office visits to a physician as a result. What do you suppose will be the intended and unintended consequences?

Using these new values and incorporating the real option : Suppose that everything stays the same as was presented in the original problem (for example, the costs each year, the value of the hotel under the two scenarios, and the probability of the city being awarded the franchise) except for two things: Usi..

Portfolio is composed of two stocks : A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 25%, while stock B has a standard deviation of return of 19%. Stock A comprises 70% of the portfolio, while stock B comprises 30% of the portfolio. If the v..

What must be the beta of the new stock : Your portfolio contains 10 stocks which are held in equal amounts. The portfolio beta is 1.66. The beta of one of the ten stocks (let’s call it stock A) is 2.20. You wish to lower the portfolio beta to 1.50 by selling all of stock A and replacing it ..

What are market price and equilibrium quantity in market : What are the market price and equilibrium quantity in this market? Now suppose that federal authorities limit the number of flights between the two cities to ensure that no more than 1,200 passengers can be flown. Evaluate the effects of this quot..

A stock has correlation with the market : A stock has a correlation with the market of 0.49. The standard deviation of the market is 25%, and the standard deviation of the stock is 33%. What is the stock's beta?

What was the net FUTA tax : Truson Company paid 4% SUTA a tax on taxable wages of $108,500. The taxable wages under FUTA were $89,400. What was the net FUTA tax of Truson Company?

Debt outstanding-expected to grow at constant rate : Marie Corp. has $1400 in debt outstanding (market value) and $2900 in common stock. Its marginal tax rate is 35%. Marie's semi-annual bonds have a YTM of 8.6%. The current stock price is $47. Next year's dividend is expected to be $2.50, and it is ex..

User Account

All Pages