Beta coefficients you spot a number of stocks

Assignment Help Financial Management
Reference no: EM131027027

Looking at a list of beta coefficients you spot a number of stocks as possible buys for your new stock portfolio. You have $80,000 to invest. You have decided to have just three stocks in your portfolio (this will make it easier to follow than a portfolio of more stocks). You have selected two already: GE with a beta of 1.40 and Bank of America with a beta of 1.78. You have invested $20,000 in each. For the final selection you are looking at Ford with a beta of 1.56, JP Morgan Chase with a beta of 1.64, Intel with a beta of 0.99 and PepsiCo with a beta of 0.35. You would like the overall beta of your portfolio to be as close to "the market" or "average stock" as possible.

Make your third selection and calculate the beta of your three-stock portfolio

(Include formula)

Reference no: EM131027027

Questions Cloud

Delegated management of the business to stacise wood : Brown, the owner of Julie’s Party Sandwiches, has delegated management of the business to Stacise Wood, a friend. Brown drops by to meet customers and check up on cash receipts, but Wood buys the merchandise and handles cash payments. In each instanc..
Considering adding robotic paint sprayer to production line : New-Project Analysis: The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,111,000.00, and it would cost another $26,600.00 to install it. The sprayer would not change revenues, but..
Salvage value after tax : Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category...
What is the portfolios expected return : A portfolio is invested 18 percent in Stock G, 58 percent in Stock J, and 24 percent in Stock K. The expected returns on these stocks are 9 percent, 15 percent, and 19 percent, respectively. What is the portfolio's expected return?
Beta coefficients you spot a number of stocks : Looking at a list of beta coefficients you spot a number of stocks as possible buys for your new stock portfolio. You have $80,000 to invest. You have decided to have just three stocks in your portfolio (this will make it easier to follow than a port..
Decided to sell some new bonds : In 2007 Carnival Cruise Lines decided to sell some new bonds (something about fixing a big ship). They sold the bonds for $1,000 (face value) with a 20 year maturity and an 7% coupon. what should they expect to receive for it in the secondary market?
Venture capitalist is planning to invest in a project : A venture capitalist is planning to invest in a project that will cost 20 million at the beginning and will provide cash flows of 10 million per year for the first two years and 8 million per year for the next two years. Thereafter, the project is te..
What is the required rate of return : Janlea Co. had total net earnings of $127,000 this past year and paid out 30 percent of those earnings in dividends. There are 100,000 shares of stock outstanding at a current market price of $11.62 a share. If the dividend growth rate is 5.6 percent..
Statements related to preferred stock : Which of the following statements related to preferred stock is correct? Preferred shareholders normally receive one vote per share of stock owned. Preferred shareholders determine the outcome of any election that involves a proxy fight. Preferred sh..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Cost of trade credit

A large retailer obtains merchandise under the credit terms of 3/10, net 35, but routinely takes 65 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's e..

  Why european mncs consider hedging their future remittances

Why should European MNCs consider hedging their future remittances from Indonesia to their parent even when the forward discount on the currency (rupiah) is so large?

  What is the expected level of sales for next year

Fort Smith Drywall expects sales next year to be $600,000 if the economy is strong, $500,000 if the economy is steady, and $300,000 if the economy is weak. The owner believes the probability of a strong economy is 20%, the probability of a steady eco..

  Project requires initial investment in net working capital

Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.79 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,110,000 in ..

  Medium-sized manufacturing firm canceled property insurance

In an effort to reduce insurance costs, the risk manager of a medium-sized manufacturing firm canceled the property insurance on the firm's $8.5 million plant and equipment, for which the annual premium was about $265,000.

  Discounting-reinvestment and combination approach

The company uses a 9 percent interest rate on all of its projects. What is the MIRR of the project using the reinvestment approach? The discounting approach? The combination approach?

  Importance of decision making as a management activity

Has what you have learned in this subject created an increased awareness of the importance of decision making as a management activity? Why or why not?

  Predictions about weather patterns published years

An investor discovers that predictions about weather patterns published years in advance and found in the Farmer's Almanac are amazingly accurate. In fact, these predictions enable the investor to predict the health of the farm economy and therefore ..

  Appropriate than person-focused pay programs

Person-focused pay is becoming more prevalent in companies; however, person-focused pay programs are not always an appropriate basis for compensation. What conditions under which incentive pay is more appropriate than person-focused pay programs?

  Customers to interact with your organization

Which of these key organizational behaviors helps customers to interact with your organization?

  What was your total return for the past year

You purchased a zero-coupon bond one year ago for $278.33. The market interest rate is now 8 percent. If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year?

  How do secondary markets assist the primary market

Explain how and why the secondary capital markets play an important role in our economy. how do secondary markets assist the primary market?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd