Find safest overall portfolio return

Reference no: EM1345529

There are few, if any, real companies with negative betas. But suppose you found one with B=-,25.

A. How would you expect this stock's rate of return to change if the overall market rose by an extra 5%? What if the market fell by an extra 5%?

B. You have $1 million invested in a well-diversified portfolio of stocks. Now you receive an additional $20000 bequest. Which of the following actions will yield the safest overall portfolio return?
1. Invest $20000 in Treasury bills(shich have a B=0).
2. Invest $20000 in stocks with B=1.
3. Invest $20000 in the stock with B=-.25

Reference no: EM1345529

Questions Cloud

Assume that the weight is evenly distributed : Calculate the horizontal force that must be applied to create an acceleratrion of 1.8g for a 1.2kg puck on a horizontal friction-free air table.

Calculate the variance of portfolio returns : Hayacinth Macaw invests 60 percent of her funds in stockI and the balance in stock J. The standard deviation of returns on I is 10 percent, and on J it is 20 percent.

What is the centripetal acceleration of an electron : Three charged particles are placed at each of three corners of an equilateral triangle whose sides are of length 2.8 . Two of the particles have a negative charge: = -6.7 and = -13.4 . The remaining particle has a positive charge, = 8.0 . What is ..

Adding four servers to network to share file : Manager would like to add four servers to network so employees can share files. Manager would also like to permit VPN access for her employees so they can work remotely.

Find safest overall portfolio return : There are few, if any, real corporations with negative betas. But suppose you found one with B=-,25.

How to calculate the ground state energy : A particle of mass m is constrained to move between two concentric impermeable spheres of radii r = a and r = b (a

Benefits rfp in process of purchasing technology : Why do companies use RFPs and what benefits does use of RFP give to process of purchasing technology?

Determining financing requirements : Bander Corporation is estimating how to finance some long-term projects. Bander has decided it prefers benefits of no fixed charges, no fixed maturity date & an rise in credit-worthiness of the firm.

Emerging issues task force-multiple exchange rates : Describe how the Emerging Issues Task Force influences Generally Accepted Accounting Standards. Describe the principal issue related to accounting for multiple exchange rates. Describe the conclusion that the EITF reached related to the issue and how..

User Account

All Pages