Compare the risks of these portfolios to the market

Assignment Help Business Management

Reference no: EM13720999

Portfolio betas Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gathered the data shown in the following table.

Portfolio weights

Asset beta Portfolio A Portfolio B

1 1.30 10% 30%

2 0.70 30 10

3 1.25 10 20

4 1.10 10 20

5 0.90 40 20

Totals 100% 100%

a. Calculate the betas for portfolios A and B.

b. Compare the risks of these portfolios to the market as well as to each other.

Which portfolio is more risky?

Reference no: EM13720999

Questions Cloud

Convertible bond outstanding : Dash Incorporated has the following convertible bond outstanding: What is the premium paid over the bond’s value as debt? What justifies this premium? Given the bond’s income advantage, how long must the investor hold the bond to overcome the premium..

What is the speed of the third piece : A spaceship of mass 2.00 x 106 kg is cruising at a speed of 5.80 x 106 m/s when the antimatter reactor fails, blowing the ship into three pieces. What is the speed of the third piece

Research employee discrimination : Friend's Bank is seeking to hire a new teller. Darrell has applied for the position. His application states that five years ago, he was convicted for embezzlement as a teller.

Risk analysis solar designs is considering investment : Risk analysis Solar Designs is considering an investment in an expanded product line. Two possible types of expansion are being considered. After investigating the possible outcomes,

Compare the risks of these portfolios to the market : Portfolio betas Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gathere..

Prepare a paper on pay-for-performance : Pay-for-performance is an umbrella term for initiatives aimed at improving the quality, efficiency, and overall value of health care

Calculate the before-tax and after-tax costs of debt : Cost of debt using both methods Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the bonds can be sold for $1,010 each; flotation costs of $30 pe..

Given calvins financial resources and investment objectives : Calvin Jacobs is a widower who recently retired after a long career with a major Midwestern manufacturer. Beginning as a skilled craftsman, he worked his way up to the level of shop super- visor over a period of more than 30 years with the firm. Calv..

Explain competitive clustering and saturation marketing : Explain the difference between competitive clustering and saturation marketing. Give examples of a company of each type. Further explain the pros and cons of competitive clustering for customers.

User Account

All Pages