What would be the beta of the replacement security

Assignment Help Financial Management
Reference no: EM13763912

An investor has a 10 security portfolio with a beta of 1.5, each with a market value of $5,000. If the investor wants to reduce the overall beta to 1.4 by eliminating a risk security with a beta of 1.7, what would be the beta of the replacement security?

Reference no: EM13763912

Questions Cloud

Market price-comparable market interest rates drop : What is the market price of a $1000, 8 percent bond if comparable market interest rates drop to 6 percent and the bond matures in 15 years?
Country present the biggest human resource challenge : From a human resource standpoint, in which country do you think a U.S. corporation would face the biggest challenge in terms of opening up an overseas division? Consider cultural, legal, economic, and any other factors you think would be relevant in ..
What is the market value of the outstanding preferred stock : Jones Design wishes to estimate the value of its out-standing preferred stock. The preferred issue has an $80 par value and has a dividend rate of 8 percent. Similar-risk preferred stocks are currently earning a 12% annual rate of return. What is the..
Minority shareholders have a greater chance of electing : Minority shareholders have a greater chance of electing a member to the board of directors if the company uses
What would be the beta of the replacement security : An investor has a 10 security portfolio with a beta of 1.5, each with a market value of $5,000. If the investor wants to reduce the overall beta to 1.4 by eliminating a risk security with a beta of 1.7, what would be the beta of the replacement secur..
Determine how you can maximize your revenue from candy sales : You have decided to enter the candy business. You are considering producing two types of candies: Slugger candy and Easy Out candy, both of which consist solely of sugar, nuts, and chocolate. At present you have in stock 10,000 ounces of sugar, 2,000..
Last claim on assets and a residual claim on income : Post your comments and respond to classmates' posts for this Discussion Question: If common stockholders are the owners of the company, why do they have the last claim on assets and a residual claim on income?
Define the decision variables and constraints : The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each air condition takes 3 hours of wiring and 2..
Development life-cycle of organizations : Stage 5 of "The Development Life-Cycle of Organizations" is known as

Reviews

Write a Review

Financial Management Questions & Answers

  Present value for the following series of future cash flows

Find the net present value for the following series of future cash flows, assuming the company's cost of capital is 6.5%. The initial outlay is $450,200.

  Compute the ratio of income taxes to income earnings

Which is the largest expense for each company in the most recent year? What is its dollar amount? Is it logical that this would be the largest expense given the nature of each company's business? Explain your answer.

  Company expects this equipment will lead to cash flows

Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $820,322, $863,275, $937,250, $1,018,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate disco..

  Present an example of a business situation

Present an example of a business situation that you believe would lend itself to the use of a quantitative business model. Clearly explain how the model could be used in this situation.

  What will bling diamonds cash dividend be in seven years

Four years ago, Bling Diamond, Inc., paid a dividend of $1.95 per share. Bling paid a dividend of $2.37 per share yesterday. Dividends will grow over the next five years at the same rate they grew over the last four years. Thereafter, dividends will ..

  What type of risk was measured and accounted

What type of risk was measured and accounted for in Parts b and and should this be of concern to the hospital's managers?

  Analyzing cost data discovered that the information

An engineer analyzing cost data discovered that the information for the first three years was missing. However, she knows that the cost in year four was $1250 and the cost continued to increase by 5% per year thereafter.

  Net profit and cash flow from given sale

Johnson, Inc. has just ended the calendar year making a sale in the amount of $10,000 of merchandise purchased during the year at a total cost of $7,000. Al- though the firm paid in full for the merchandise during the year, it has yet to collect a..

  Cash conversion cycle

Primrose Corp has $20 million of sales, $3 million of inventories, $3 million of receivables, and $2 million of payables. Its cost of goods sold is 65% of sales, and it finances working capital with bank loans at an 7% rate. Assume 365 days in year f..

  Similarities and differences between net present value

Explain the similarities and differences between net present value (NPV), profitability index (PI), and economic value added (EVA) and how can current risk and political risk be minimized when one is making a foreign direct investment?

  Describe a fictitious company and provided its background

describe a fictitious company and provided its background. then you are ready to start building the marketing plan with

  What is the break-even point

What is the Break-even Point

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