Calculate the portfolios new beta

Assignment Help Financial Management
Reference no: EM13766781

Calculate the portfolio’s new beta given the following information. Currently, you hold a fairly diversified portfolio of 50 stocks, each investment is $6,000. The portfolio’s beta is 1.3. After hearing some troubling news concerning one of your securities, you decide to sell it, beta of 1, and buy another security with a beta 2.6 with same dollar amount.

Reference no: EM13766781

Questions Cloud

What rate of return must he earn : Mr. Fish wants to build a house in 8 years. He estimates that the total cost will be $150,000. If he can put aside $11,000 at the end of each year, what rate of return must he earn in order to have the amount needed?
Average beta of the new stocks added to the portfolio : A mutual fund manager has a 30 million portfolio with a beta of 1.5. The risk free rate is 4% and the market risk premium is 6%. The manager expects to receive an additional 5 million, which she plans to invest in a number of stocks. After investing ..
What is the present value-discount rate : Ambrin Corp. expects to receive $2,000 per year for 20 years. What is the present value of this 20 year cash flow? Use an 9% discount rate
What will be the required return on your portfolio : You have been managing a $10 million portfolio that has a beta of 1.4 and a required rate of return of 14%. The current risk free rate is 5.5%. Assume that you will receive another 600,000. If you invest the money in a stock with a beta of 0.75, what..
Calculate the portfolios new beta : Calculate the portfolio’s new beta given the following information. Currently, you hold a fairly diversified portfolio of 50 stocks, each investment is $6,000. The portfolio’s beta is 1.3. After hearing some troubling news concerning one of your secu..
Real risk free rate-what inflation rate is expected : Assume the real risk free rate is 2% and that the maturity risk premium is zero. If a one year Treasury bond yield is 5% and a 2yr Treasury bond yields 7%, what is the 1year interest rate that is expected one year from now. What inflation rate is exp..
Compute the eps-roe-price and growth rate : We want to compute the EPS, ROE, price and growth rate of Bob & Co. It has 1 m shares outstanding and $75m of book value of equity. Bob & Co. expects to sell $20m worth of sales and keeps 10% of its profit. Its profit from operations is $7 million. F..
Global company traded in the capital markets : How do you think that most businesses (such as Dell computers -- starting in a college dorm room to ultimately becoming a global company traded in the capital markets.) are first financed as a start-up company?
Explore vegetable data provided by usda economic resarch : Explore the vegetable data provided by the USDA Economic Research Services regarding per capita use (consumption) and production trends.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms optimal capital budget

What is the firm's optimal capital budget when differential risk is considered and what is the firms optimal capital budget?b. Now, suppose Medtronics managers want to consider differential risk in the capital budgeting process.

  A bond is purchased for 985557 it is kept for 5 years and

a bond is purchased for 9855.57. it is kept for 5 years and interest is received at the end of each year. immediately

  What is the present value of purchasing and leasing the car

What is the present value of purchasing the car? What is the present value of leasing the car? What break-even resale price in four years would make you indifferent between buying and leasing?

  Option pricing model is employed to estimate the fair value

On January 1, 2008, PWC awarded stock options to two of its top managers, Price and Waterhouse. Price received options to purchase 25,000 shares of PWC $1 par common stock at an exercise price of $10/share. Waterhouse received 15,000 options to purch..

  Ritz furniture has a contribution margin ratio

Ritz Furniture has a contribution margin ratio of 0.17. If fixed costs are $171,500 how many dollars of revenue must the company generate in order to reach the break-even point?

  Find the value in the financial statements

Enter the missing values in the financial statements. Assume the company started operations January 1, 2013, and all transactions involve cash.

  What is your estimate of the gross profits to the firm

Carlyle chemicals are evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flow. Specifical..

  Explain what is the nominal interest rate

What is the nominal interest rate on a 7-year Treasury security? Round your answer to two decimal places.

  Financial reporting environment for the quarter

Prepare a 2 page newsletter that identifies and summarises developments and changes in the financial reporting environment for the quarter from January to March 2013.

  What is the principal balance on the loan after six months

Assume the following information for a car note: Original loan amount = $23,500 Annual interest rate = 7.25% Term of loan = 24 months. What is the principal balance on the loan after six months?

  What is his portfolios beta

Troy has a 2-stock portfolio with a total value of $100,000. $37,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolio’s beta?

  Process of performing financial analysis of a public

process of performing financial analysis of a public companygeneral component---no more than one paragraph describing

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