What will be the new beta of the portfolio

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1) You hold a diversified portfolio consisting of many different common stocks with a total market value of $100,000. The portfolio beta is equal to 1.15. You have decided to sell one of your stocks, a lead mining stock whose beta is equal to 0.7 , for $10,000 net and to use the proceeds to buy $10,000 of stock in a steel company whose beta is equal to 2.0 . What will be the new beta of the portfolio?

2) Calculate the required rate of return for Mars Inc.'s stock. The Mars's beta is 1.3, the rate on a T-bill is 4 percent, the rate on a long-term T-bond is 4.7 percent, the expected return on the market is 11.5 percent, the market has averaged a 14 percent annual return over the last six years, and Mars has averaged a 14.4 return over the last six years

Reference no: EM13809188

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