Calculate the beta of your three-stock portfolio

Assignment Help Financial Management
Reference no: EM131075835

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: The Gap with a beta of 1.31 and Disney with a beta of 1.25. You have invested $20,000 in each. For the final selection you are looking at Ford with a beta of 2.72, ebay with a beta of 1.75, IBM with a beta of 0.68 and the parent of Anheuser-Busch with a beta of 1.00. 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 (and yes, I need to see the formula!

Reference no: EM131075835

Questions Cloud

Determining the new project manager : You are a project manager who was just assigned to take over a project from another project manager who is leaving the company. The previous project manager tells you that the project is on schedule, but only because he has constantly pushed the t..
What is the project year zero net cash flow : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. If the tax rate is 34 percent..
Find the y-intercepts of the graph of the given equation : Find the y-intercept(s) of the graph of the equation, if any exist. (work optional) Find the x-intercept(s) of the graph of the equation, if any exist. (work optional)
Accept one of three possible projects : Your company can accept one of three possible projects. Project A has a net present value (NPV) of US $30,000 and will take six years to complete. Project B has an NPV of US $60,000 and will take three years to complete. Project C has an NPV of US..
Calculate the beta of your three-stock portfolio : 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. Make your third selection and calculate the be..
How many units will the consumer buy in total : How many units will the consumer buy in total?
The intangible benefits mar-bal appears to enjoy : 12-22. Mar-Bal's New ERP System (Analyzing an ERP Study and Implementation)Access the full case story of Mar-Bal Company (the AIS-at-Work for this chapter) at www.iqms.com. Then, respond to each of the following requirements:
Provide an overview of the purposes of a sourcing plan : Dell is hiring. After years of shedding staff, they are expanding their sales, engineering, and marketing forces. Research what jobs they have open now and pick one. Then recommend sourcing methods to fill this type job. Consider if they should lo..
Perform horizontal fragmentation : How many numbers of table is requred to perform horizontal fragmentation

Reviews

Write a Review

Financial Management Questions & Answers

  What is the new par value per share

The company with the common equity accounts shown here has declared a 4-for-one stock split when the market value of its stock is $33 per share. The firm’s 80-cent per share cash dividend on the new (post split) shares represents an increase of 25 pe..

  Non-dividend-paying stock has a futures contract with price

A non-dividend-paying stock has a futures contract with a price of $71.5 and a maturity of six months. If the risk-free rate is 4.1 percent, what is the price of the stock?

  Change due to changes in the interest rate

The risk that the price of a bond will change due to changes in the interest rate is greater: Corporate bonds are shown on the balance sheet as:

  What are the main aspects of accounting standard

Calculate the net cash flow from financing activities based and discuss in brief the treatment of following items in Cash Flow Statement - Calculate the net cash flow from financing activities

  What is the annual payment required by the mortgage

Suppose you purchase a home for $400,000. After making a down payment of $60,000, you borrow the balance through a mortgage loan at 8 percent for 20 years. What is the annual payment required by the mortgage? Round your answer to the nearest dollar.

  Assume that the risk-free rate has not changed

On Oct 10, 2015, gold on the spot market is at $1,000 an ounce. A forward gold contract for delivery of gold on Oct 10, 2016 is priced at $1,030. Three months pass and spot gold is still at $1,000. What should be the approximate price of the Oct 10, ..

  Redraw the sml based on the new expected inflation premium

Write an equation for the SML given the increase in the expected inflation premium, assuming that all other factors remain constant. Redraw the SML based on the new expected inflation premium.

  The values of outstanding bonds change

The values of outstanding bonds change whenever the going rate of interest changes. in general, short-term interest rates are more volatile than long-term interest rates. therefore, short-term bond prices are more sensitive to interest ratw changes t..

  Calculate the bonds annual interest payment

Consider a $1,000 par value investment grade corporate bond which currently has a Yield to Maturity, YTM, of 5.475%. The bond has an annual coupon rate of 7.625% and is currently selling for 115.247% First, calculate the bond’s annual interest paymen..

  What is the investment proportion

Assume that you manage a risky portfolio which consists of Stock A and Stock B in the proportions listed below. Expected Return with an expected rate of return of these stocks are also listed in the table. The T-bill rate is 5%. What is the expected ..

  Movements in cross-exchange rates

Movements in Cross-Exchange Rates. Last year a dollar was equal to 7 Swedish kronor, and a Polish zloty was equal to $.40. Today, the dollar is equal to 8 Swedish kronor, and a Polish zloty is equal to $.44. By what percentage did the cross-exchange ..

  Dividends are anticipated-what is the required return

The next dividend payment by Mosby, Inc. will be $2.45 per share. The dividends are anticipated to maintain a 5.5 percent growth rate, forever. If the stock currently sells for $48.50 per share, what is the required return?

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