Portfolio equally invested in risk-free asset

Assignment Help Financial Management
Reference no: EM131073405

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 2.05, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places.)

Reference no: EM131073405

Questions Cloud

Work for a specific major company : Then suppose you would like to work for a specific major company.  Search the Net for that company's careers site and any other sources of information about the company that would be useful to you as a job seeker?  How many different locations did..
Semiannual coupon bonds with risk and maturity : Semiannual coupon bonds with the same risk (Aaa) and maturity (20 years) as your company's bonds have a nominal (not EAR) yield to maturity of 9%. Your company's treasurer is thinking of issuing, at par, some $1,000 par value, 20-year, quarterly paym..
Calculate standard deviations of return for five alternative : Calculate the standard deviationsof returns for the five alternatives. Calculate the coefficients of variation of returns for the five alternatives What type of risk do these statistics measure?
Incredible apps adopt the minto pyramid principle : 1. Should IncredibleApps adopt the Minto Pyramid Principle? If yes, why? If no, why not? question. (Please remember that your grammer should not have any issues) -> Answered 'Yes'
Portfolio equally invested in risk-free asset : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 2.05, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio?
Explain why stated methodology will be best : Explain why stated methodology will be best. Describe why stated research design is appropriate. Identify the sample and needed sample size. Justify sample size. Discuss your intended sampling procedure.
Building for their business operations : Mitchell and Meyer Associates bought land and a building for their business operations on January 10, 2013 for $600,000. The land was appraied at $200,000 and the building purchase price was $400,000.
Define environmental sustainability : define environmental sustainability.
Depreciation and amortization expense : Cox Corporation reported EBITDA of $22.5 million and $5.4 million of net income. The company has a $6 million interest expense and its corporate tax rate is 35%. What was Cox's depreciation and amortization expense?

Reviews

Write a Review

Financial Management Questions & Answers

  Ockbox system offered by bank located in pittsburgh

Time Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh.

  Book value of equity and total liabilities

The Here Today Corporation has applied to your bank for a loan. You have their financial statements and the Z-score model of: Z = 6.56*(Net Working Capital/Total Assets) + 3.26*(Accumulated Retained Earnings/Total Assets) + 1.05*(EBIT/Total Assets) +..

  What would be the after-tax amount

Assume that Jane Adams pays income taxes at a 35 percent rate. What would be the after-tax amount on $100 of interest income she receives?

  Heat loss through exterior walls of her warehouse will cost

A small business owner estimates that the heat loss through the exterior walls of her warehouse will cost approximately $4,000 per year. A local company is offering insulation that can reduce the heat loss by 80%, with an installation cost of $17,000..

  What is the treynor ratio

A portfolio has an average return of 9.7 percent, a standard deviation of 8.6 percent, and a beta of .72. The risk-free rate is 2.1 percent. What is the Treynor ratio?

  Manufacturing plant-find the rate of return

You are considering an upgrade at a chip manufacturing plant. A new VLSI testing station costs $100,000, installed. It will save $50,000 per year in labor costs. Use five-year tax life and a tax rate of 40%. Find the rate of return (IRR)

  What is the after tax salvage value of the asset

An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,080,000 and will be sold for $1,280,000 at the end of the project. If the tax rate is 35 percent, what is the after tax ..

  Command contains different stratification levels

A clearly demarcated chain of command contains different stratification levels. This concept is evident in a ________. A: Conferred membership status B: Status HIerarchy C: Position level D: Role Status

  Different’ target group

Which celebrity would you use to endorse Diet Pepsi in attempts to reach a ‘different’ target group? Who might you use for regular Pepsi? Diet Coke? Coke Classic? Sprite? Explain and justify your choice for each.

  The four-quadrant model

The four-quadrant model of DiPasquale and Wheaton (1992) has been used to describe the boom and bust cycle of real estate markets. Answer the following two questions: Draw the four-quadrant model and explain the segments of the real estate market cov..

  Discount interest tax shields at unlevered cost of equity

After reading all about the tax advantages of having a high leverage ratio, the CEO of WMart is considering a leveraged recapitalization and wants to know the value of his firm subsequent to the recap.  Using the information above regarding WMart an..

  What was the times interest earned ratio

For the most recent year, Seether, Inc., had sales of $437,000, cost of goods sold of $219,400, depreciation expense of $59,100, and additions to retained earnings of $51,300. The firm currently has 22,000 shares of common stock outstanding, and the ..

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