Determine the portfolios required return

Assignment Help Finance Basics

Reference no: EM1354025

A portfolio manager has a $10 million portfolio, which consists of $1 million invested in 10 separate stocks. The portfolio beta is 1.2. The risk-free rate is 5% and the market risk premium is 6%.

____ 6. What is the portfolio's required return?
a. 9.85%
b. 12.00%
c. 12.20%
d. 12.35%
e. 6.20%

____ 7. The manager sells one of the stocks in her portfolio for $1 million. The stock she sold has a beta of 0.9. She takes the $1 million and uses the money to purchase a new stock that has a beta of 1.6. What is the required return of her portfolio after purchasing this new stock?
a. 14.60%
b. 10.75%
c. 12.62%
d. 12.35%
e. 13.35%

Reference no: EM1354025

Questions Cloud

Developmental conflicts and challenges-case study : Amber is a 35-year-old woman who immigrated to this country several years ago from Nigeria. She recently graduated from a prestigious law school and legally changed her name to Amber.

What echnopolies are willing to pay : Supposre that there are equal numbers of each customer type, and that the MC of the iphone is $100."

Simple organizational structure : Simple organizational structure - The simple organizational structure is the oldest, and most common form of organization

What speed does he need at the bottom : How far ahead of the film should the lens be if the object to be photographed is 13 m away.

Determine the portfolios required return : A portfolio manager has a $10 million portfolio, which consists of $1 million invested in ten separate stocks. The portfolio beta is 1.2. The risk-free rate is 5 percent and the market risk premium is 6 percent.

Evaluating inquiry and oral evidence : (Audit evidence) In an audit of financial statements, an auditor must judge the validity of the audit evidence obtained.

Estimate the second partner''s advice not to move downtown : We have spent so much on our present office that we cannot afford to waste this money by moving now." Estimate the second partner's advice not to move downtown.

Universal diverse orientation : Describe how this person were mistreated, and how this mistreatment suggests a universal diverse orientation was not in place.

Find the value added from acquisition of the player : The general manager of the Miami Dolphin a NFL Team is planning paying $2.5 million per year for a Star player, along with a 2$ million up front signing bonus.

User Account

All Pages